MODULE 1 2.

Which of the following is likely to happen when

Exercises there is an improvement in technology while the
TRUE 1. The scope of economic growth includes demand for a good remains constant?
literacy rate and academic level.
  There will be an increase in supply without
FALSE 2. Economic development involves affecting the price.
quantitative changes but not qualitative changes   There will be a decrease in supply and a
in the quality of life of people in a country. decrease in price.

TRUE 3. When there is economic development,   There will be an increase in supply and a
there is economic growth. decrease in price.

TRUE 4. Advancement in technology may occur if     There will be an increase in the equilibrium
quantity of supply and price 
there is economic development
3. In explaining the concept of production
possibilities, one of the assumptions is that quantity
TRUE 5. The scope of economic growth includes
and quality of resources remain constant. What does
GDP, GNP and per capital income.
this imply?
FALSE 6. Life expectancy is a measure of   Resources are fully used.
economic growth
    No workers are unemployed.
FALSE 7. Human development index recognizes
  No factory is idle.
the direct relationship between income levels and
human satisfaction No new training programs for workers. 

FALSE 8. Population growth rate is the expected 4. It occurs when the price is lower than the market
number of years to be lived by an individual in full price level
health.
  Economic growth  Surplus 
FALSE 9. When there is economic growth there is
  Shortage 
always economic development. [Link] of the following factors causes shift of the
supply curve?
TRUE 10. Purchasing power parity is a method for
comparing income between countries.   Changes in the technology used to produce
the product

Quiz    Change in consumer tastes 

[Link] refers to the rise in the average price level
  Change in the prices of complements and
in the economy. Because the price of commodities
substitutes
increases, the purchasing power also increases
proportionally. Which of the following statements     Change in consumers’ income
holds?
[Link] ability to influence the market price of a
The first statement is true. The second
product is:
statement is false.
  competitive pricing.
  The first and second statements are both true.
    microeconomic pricing.
  The first and second statements are both false.
    market power.
  The first statement is false. The second
statement is true.   economic power. 
[Link] of the following is likely to happen when [Link] of the following is not considered a
the cost of production increases? service?

  Supply curve tends to shift inward and the   city mass transit 
price tends to decrease
  health care
 Supply curve tends to shift inward and the
price tends to increase   education

    Supply curve tends to shift outward and price an automobile

tends to decrease  
[Link] refers to the study of the total economy.
  Supply curve tends to shift outward and the
price tends to increase    Managerial economics
8. When the demand curve shifts to the right, we say   Macroeconomics
that:
   Microeconomics 
    price has decreased. 
  Econometrics
  demand has increased. 

  equilibrium quantity has decreased.  [Link] of the following is generally not a private

good?
demand has decreased.
9. When the demand for personal computer   a house
increases, the demand for software proportionally   a school 
increases. What is the impact on price?
  a factory
  The price of the personal computer will
increase.      a restaurant 
 
  The price of both personal computer and 14. When we say “all other things equal” with regard
software will increase. to demand and supply, we mean that:
 The price of the software will increase.   the market is at equilibrium.
  The price of the personal computer will   only one curve at a time can shift.
increase while the price of software will remain
unchanged.   there is neither a surplus nor a shortage in the
market.
[Link] of the following is not true? Production
possibilities assumes that:   factors other than price that could affect
quantity demanded or supplied do not change.
while technology may change, the quantity of
resources does not change over the relevant time [Link] of the following is described by the law of
period. supply?
    all available resources are fully used.    Price and supply are negatively related.
  the quality of resources does not change over   Price and supply are positively related
the relevant time period. 
  Price and supply are inversely related.
  all available resources are efficiently used.
    The relationship of these variables are not
clear.
 
 [Link] can reach a point beyond its current
production possibilities curve if economic growth 29.A law in economics which states that price and
occurs. quantity demanded are negatively related all other
things equal
  True     False LAW OF DEMAND
 17. Any point on the production possibilities curve
represents full employment. [Link] to the condition wherein most things that
people want are available only in limited supply
True     False
SCARCITY
 [Link] price will go up if supply increases

. True e False 31. Which of the following is a microeconomic

  topic?
 
[Link] cost is defined as the best  distribution of income
alternative foregone.
32. Which of the following is not true? Production
  True    False possibilities assumes that:
  20. Scarcity means that we have limited resources
relative to our unlimited wants. while technology may change, the
  True    False quantity of resources does not change
  over the relevant time period
21. Liberals (economic left) generally value equity.
33. Which of the following factors causes shift of
  True    False  the supply curve?
 22. Price and quantity demanded are positively
related.  Changes in the technology used to
produce the product
  True    False
23.“Increasing opportunity costs” means that as 34. From which scenario does market power set
more of one good is produced, we must give up
in?
increasingly smaller amounts of the other good.

  True    False  When there is consolidation of

 24.A shift of the supply curve to the right is an industry players giving rise to
increase in supply. concentrated supply

True False 35. It refers to a situation in which resources are

 25. Public goods are generally provided by the not fully utilized in production.
government.
 Unemployment
True  False
 
TRUE 36. An excise tax on cigarettes will cause an
[Link] study of the economy as a whole.
increase in the price of cigarettes.
MACROECONOMICS
FALSE 37. Pure capitalism is characterized by
27. A sustained increase in production represented
private ownership and government economic
by an outward shift of the production possibilities
curve decision making.
ECONOMIC GROWTH
FALSE 38. Most economists believe that the
28.A law in economics which states that there is a government should not become involved in the
positive relationship between price and quantity case of a market failure.
supplied
LAW OF SUPPLY
TRUE 39 Any point on the production  [Link] expectancy is a measure of economic growth
possibilities curve represents full employment.
  True   False
TRUE 40. Changes in the number of sellers in the [Link] there is economic growth there is always
economic development.
market may cause supply curve to shift.
True  False
TRUE 41. Economic growth is associated with an 8. When there is economic development, there is
outward shift of the production possibilities curve. economic growth

FALSE 42. Opportunity cost is a sunk cost.  True  False

[Link] scope of economic growth includes literacy
rate and academic level.
OIKONOMOS 43. The original form of economics
which meant the management of the hearth and Truet False
10. Advancement in technology may occur if there is
home
economic development
ECONOMICS 44. A social science concerned with   True   False
using scarce resources to obtain the maximum Chapter 2
satisfaction of the unlimited material wants of QUIZ
society. [Link] of the following is a method for comparing
income between countries?
PUBLIC GOODS 45. Goods provided by
government like police and fire protection Actuarial valuation parity

  Purchasing power parity 

MODULE 2 Transfer pricing parity 
Exercises
[Link] growth rate is the expected number of Mark-up pricing parity
years to be lived by an individual in full health.  

  True   False [Link] GNP is the ratio between the cost of

 [Link] power parity is a method for exploiting a natural resource and the social cost of
comparing income between countries. pollution emissions.  Green GNP is calculated by
dividing the standard GNP by the estimated cost of
  True    False
environmental degradation. Which of the following
 [Link] scope of economic growth includes GDP, GNP
statements holds?
and per capital income.
Correct! Both statements are false.
  True    False
3. Which of the following characterizes the
 4. Human development index recognizes the direct
traditional society stage of economic development?
relationship between income levels and human
satisfaction   Exploitation of absolute advantage in
international business
  True!   False
    Installation of physical infrastructure 
5. Economic development involves quantitative
changes but not qualitative changes in the quality of  Transition triggered by external influence,
life of people in a country interests, and markets 

  True  False  Investment in manufacturing

 
 4. It is possible to have economic growth without  12. When there is economic growth there is always
economic development. Therefore, there could be economic development.
an increase in GDP without any actual improvements
in the living standards. Which of the following   True  False 
statements holds? 13. The scope of economic growth includes literacy
rate and academic level.
    Both statements are true.
5. Which of the following best describes economic   True  False 
development? 14. Advancement in technology may occur if there is
economic development
Increase in the standard of living
  True    False
[Link] of the following is NOT a measure of  
economic development?  15. Purchasing power parity is a method for
comparing income between countries.

   Interest rate   True    False

  16. The scope of economic growth includes GDP,
7. Economic development may be defined as the rise GNP and per capital income.
in the level of production in an economy along with   True    False
the advancement of technology, and improvement
in the living standard of people. The kind of changes [Link] development involves quantitative
expected in economic development is purely changes but not qualitative changes in the quality of
quantitative. Which of the following statements life of people in a country
holds?
 True    False
 The first statement is true. The second  
statement is false. 18. When there is economic development, there is
  economic growth.
[Link] provides unique insights into the benefits arising
from education, from earning potential to the  True   False
economic growth, and well-being of societies at [Link] development index recognizes the direct
large. relationship between income levels and human
satisfaction
  Educational attainment
    True    False
  [Link] expectancy is a measure of economic growth
[Link] of the following are the scope of economic
growth? True False
 
  GDP, GNP, and per capita income 21. An economic system where the government
invests in certain sectors of the economy in order to
 10. It refers to the expected number of years to be stimulate the growth of new (or specific industries in
lived by an individual in “full health”. the private sector
 Life expectancy EAST ASIAN MODEL

11. Population growth rate is the expected number 22. A branch of economics that focuses on improving
of years to be lived by an individual in full health. fiscal, economic, and social conditions in developing
countries.
  True   False
DEVELOPME
DEVELOPMENT ECONOMICS
 
23. The Asian Contagion which was the sequence of Chapter 3
currency devaluation and other events that began in Exercises
the summer of 1997 and spread through many Asian [Link] included in the residual includes
markets.
ASIAN FINA
  BETTER INVENTORY MANAGEMENT 
ASIAN FINANCIAL CRISIS
24. It is a multidimensional phenomenon that   BETTER COORDINATION WITHIN THE
focuses on the income of the people and on the ORGANIZATION
improvement of the living standards of the people of   CHEAPER DISTRIBUTION
a country
ECONOMIC D   ADOPTION OF NEW TECHNOLOGY
ECONOMIC DEVELOPENT
25. It is the increase in the market value of the goods     BETTER EDUCATED WORKERS
and services produced by an economy over time
ECONOMIC G 2. Growth Theories include
ECONOMIC GROWTH
26. Due to the rapid industrialisation in South   NEW GROWTH THEORY  
Korea, Singapore, Taiwan and Hongkong after
  STRUCTURAL THEORY
the post war period, these countries are
called   SOLOW OR NEOCLASSICAL THEORY

    KEYNESIAN THEORY
FOUR ASIAN TIGERS
    POWER-BALANCE THEORY
27. Which of the following statements  
characterizes the high mass consumption  
stage of economic development? 3. Rostow's stages of growth model includes:

  HIGH MASS CONSUMPTION

  Development of wider industrial and
commercial bases     DRIVE TO MATURITY 
    TAKE-OFF

  Exploitation of comparative advantages      TRADITIONAL SOCIETY

in international trade   PRECONDITIONS FOR TAKE-OFF
   
4. South Asia includes the following countries:
  Installation of physical infrastructure
  BHUTAN 
 
  AFGHANISTAN 
  Transition triggered by external
  INDIA 
influence, interests, and market
  BANGLADESH  

  PAKISTAN

 
 MODULE 3  
QUIZ 8. It is the type of technical progress achieved by
[Link] any level of capital and labor inputs, there will combining together the factors of production.  It
be an associated level of output.  When the output relates to the way factors are combined together in
increases faster than the increase in inputs, the the work place like management or organizational
production function is said to have constant return innovation
to scale. Which the following statement holds?
    Disembodied Technical Progress
  The first statement is true. The second 9. Which growth theory considers the law of
statement is false. diminishing returns in the growth equation?
 
2. Which growth theory supports an equitable price   Solow (Neoclassical Model)
of raw materials from poor countries in the South as  
against the price of finished goods manufactured 10. It is the type of technical progress that changes
form rich countries in the North? the nature of inputs which includes more highly
skilled and computer literate workers or the
  Power Balance Theory installation of new innovations in capital equipment. 
[Link] refers to the growth theory where price of raw
materials from poor countries tend to deteriorate   Embodied Technical Progress
over time and export more to keep them from  
slipping backward.   11. When the output increases at the same rate as
the inputs, the production function is  described as
  Power Balance Theory having constant returns to scale. If you multiply each
  input by some constant, the output would increase
 4. Which of the following includes the portion of by that constant.  
economic growth that cannot be explained by the
residual measures of inputs of land, labor and   Both statements are true.
capitaL  
12. A term that refers to a quantitative tool to
 Total Factor Productivity  breakdown how specific factors contribute to
  economic growth.  
5. The law of return to scale governs the growth
process to a large extent.  This is to say that as the   Growth accounting
worker acquires more capital, output increases  
because there are more workers in the production  13. Which of the following is a result when rich
line to produce the output.  Which of the following countries exploit poor countries in terms of prices of
statements holds? raw materials and finished goods?
 
  Both statements are true
  Power Balance Theory
6. South Asia includes
   14. It refers to the growth in output unaccounted by
the growth of labor and capital
  Bangladesh and Pakistan
     Residual Growth
7. The government may increase its spending on
infrastructure projects such as bridges, farm-to- 15. This can take place when there is economic
market roads and advancement in communication.  growth and the scale of production increase (scale
This action of the government may also be referred efficiencies) or production shifts from a low
to as its fiscal policy  (means by which a government productivity sector to a more productive sector. 
adjusts its spending levels and tax rates to monitor Here the economy is not static.
and influence a nations's economy,) Which of the   Dynamic efficiency
following statements holds   
  Both statements are true
16. Dynamic efficiency can take place when there is 23. The Lewis-Fei-Ranis Model states that there is
economic growth.  The scale of production increase low accumulation of capital, low productivity and
or production shifts from a low productivity sector to low earnings in the rural areas (traditional sector).
a more productive sector.  
On the other hand, the modern sector has high
 
productivity and pays higher wages, thus, people
  Both statements are true. from the rural areas move to urban areas (cities) to
take advantage of higher earnings. Which of the
17. A curve depicting the best possible combination following statement is true?
of goods that is priced in an economy because the
combination utilizes all the available inputs  Both statements are true
efficiently and minimizes waste.  
24. Absolute convergence refers to the point where
  Production possibility frontier
investment and depreciation meet
 
FALSE 
18. Which of the following is demonstrated by the
structuralist approach to economic development?
25. How does contradictory monetary policy reduce
 
inflation?
  Process of shifts in resources, and a shift from By increasing rate on loan, increasing
agricultural to industrial and service sector interest rate on bank deposits, and selling of
   securities.
19. It describes the relation between two or more 26. It refers to the macroeconomic policy pertaining
than two variables and tries to give the relationship to government spending and revenue collection. The
in a mathematical form action of government to control interest rates on
borrowing is an eample of fiscal policy.
  Function The first statement is true. The second
  statement is false.
20. country into business interests located in 26. The only ASEAN country that Spanish is spoken
another country. as one of the major language?
Philipines
  Foreign direct investment
27. The ASEAN country which only 24% the
population are residing in urban areas?
 21. Factors included in the residual (A)
Cambodia
 Adoption of new technology and better
28. When the output increases faster than the
management
increase in inputs, the production function is said to
o Continuing use of existing inventory
have constant return to scale.
management False
o Reduction in budgets and use of efficient 29. At any level of capital and labor inputs, there will
production techniques. be an associated level of output.
o Adoption of new technology and TRUE
employment of low-paying unskilled [Link] refers to the movement of the economy toward
workers the PPF where the law of diminishing returns sets in
22. Which of the following refers to the outward- and growth begins to decline
looking policy of Asian countries attributable to their Static efficiency
bullish economic development. (Bullish Trend' is an 31. Fiscal policy is the macroeconomic policy
pertaining to government spending and revenue
upward trend in the prices of an industry's stocks or
collection
the overall rise in broad market indices, True
characterized by high investor confidence,) 32. A society or economy on drive to msturity stage
is able to export production, bringing in money from
 Foreign Direct Investment (FDI) other countries that helps the economy grow larger
beyond actual consumption
False
 Module 4-5  
QUIZ  
[Link] refers to the surge in the financial market 4. After the financial crisis, the global economy
caused by speculation regarding a commodity recovered particularly between 2002 and 2007
which results in an explosion of activity in a where exchanged rates gained strength.
market segment resulting in vastly over-inflated Strengthening exchange rate means the
prices. weakening of the local currency against US
  Dollars.
 
  Bubble Economy
     The first statement is true. The second
[Link] bubble development is the period when statement is false.
the stock market, real estate, and bank credit  
bubble grew in the first half of the 90s.                   
The export sector played a complementary role 5. During the Asian financial crisis, the Thai baht
in the bull market  bubble that developed in first began to decline in June 1997, and was
Southeast Asia (A bull market is a market that is followed by the currency devaluation in
on the rise and where the economy is Malaysia, Indonesia, and Philippines. The
sound) .  Which of the following statements devaluation subsequently spread to the
holds? Australian dollar and Korean Won 1997:
 
  The first statement is false. The second
statement is true.   The first and second statements are
  true. 
 
  The first and second statements are false.
6. Which of the following caused high costs of
 
financial services that led to the Asian financial
  The first and second statements are true. crisis in 1995?
 
  Higher interest margins and lending rates
  The first statement is true. The second to borrowers
statement is false.  
3. Which of the following factors contributed to 7. Which of the following is required by the
the severity of Asian financial crisis in 1995 information and transparency reform where
where foreign banks and financial institutions accountants play a major role?
were denied to enter the Asian countries?  

  Restrictions on foreign banks’ entry   Standardization of accounting and

  financial reporting

9. Another factor contributory to the Asian

[Link] of the factors that contributed to the financial crisis in 1995 was the disorganized
overheating of the economy in 1995-1996 was fund management system. Which of the
the nonperforming loans. Which of the following best describes this factor?
following results to a nonperforming loan?
    Inefficient handling and disbursement of
 
foreign funds
  Approval of risky or unsound projects  
    
10. One of the factors in bubble economy was [Link] of the following contributed for the
the ineffective sterilization (a form of monetary slow productivity of agriculture?
action  by the central bank) of capital inflows. 
  Shifting of focus from agriculture to
Which of the following best describes
industrial sector
sterilization of capital inflows?
 
 
  Non-availability of complementary inputs
  It chokes off some excess demand caused
 
by capital influx.
    Non-availability of innovation and
11. Which of the following is true about the modernization in agriculture
macroeconomic aspects of agricultural  
development?
  Non-availability of credit facility to
  Agriculture is labor intensive or rigorous. farmers
   
12. In which of the following ways can efficiency [Link] of the following are the major forms
of traditional agriculture be achieved? of land tenure and land use in agriculture?
   
  Refined method of cultivation   Family-operated farms and tenancy
   agreement
13. Which of the following best describes  
genetic engineering? [Link] growth model is followed by
agricultural transformation?
  Modification of the characteristics of
 
plants to make it resistant to insects and herbs
  Structuralist
14. Which of the following exemplifies foreign
exchange from agriculture?
  20. According to the microeconomics of Asian
agriculture, changes in land tenure did not
  Importation of capital equipment
significantly improve agricultural productivity.
 
Which of the following is a reason for this?
 
 
15. Agriculture is a good source of input capital
to achieve modern economic growth. From   Land is poorly distributed.
what form does this input capital come?  
   21. Which of the following were among the
external factor difficulties causing the Asian
financial crisis in 1995?
  Savings from invested income.
 
Rapid growth in current-account
16. Which of the following is considered a deficits.
tenancy agreement? 22. The post financial crisis saw substantial
  Tenant gives a proportion of the output improvement both in global and Asian
to the land landlords. economy. Which of the following resulted in
  the acceleration in the economy of Asian
region set in led by India and China between restructuring. Which of the following
2002 and 2007? statements holds?

Improvement in Domestic and foreign The first and second statements are
trade true.

23. To facilitate future economic

development after the financial crisis,
international banks and aid agencies have
recommended reform agenda. Which of the
following is/are among the reform agenda
suggested by international banks and aid
agencies?

Financial markets reform and capital

account reform

24. The Asian financial crisis resulted in the

division of the Asian economies to Southeast
and East Asia. Which of the following
comprised East Asia?

China, Taiwan, Korea, and Hongkong

25. Which of the following caused high costs
of financial services that led to the Asian
financial crisis in 1995?

Higher interest margins and lending

rates to borrowers
19. Which of the following is a reason why
farmers resist agricultural innovation?

Uncertainties that may be caused by

innovation

20. Agriculture provides capital for economic

growth. Which of the following is the source
of that capital?

  Surplus from farmer’s income

22. There were several reform measures
prescribed by the international banks and aid
agencies after the Asian financial crisis. One
of these reform agenda included debt