Q.1 Which economist is primarily associated with the 'Linear Stages of Growth' model?
Adam Smith
Rostow
Schumpeter
Keynes
Explanation - W.W. Rostow proposed the 'Stages of Economic Growth', a linear theory describing the transition of economies through five stages.
Correct answer is: Rostow
Q.2 Which of the following is considered a characteristic of underdeveloped economies in the Lewis Model?
High productivity in agriculture
Surplus labor in agriculture
Excess capital in industry
Strong financial markets
Explanation - The Lewis dual-sector model assumes underdeveloped economies have surplus labor in the agricultural sector, which can be transferred to the industrial sector without loss of output.
Correct answer is: Surplus labor in agriculture
Q.3 According to Schumpeter, what is the primary driver of economic development?
Government policy
Technological innovation
Population growth
Capital accumulation
Explanation - Schumpeter emphasized entrepreneurship and technological innovations as the main forces driving economic development through creative destruction.
Correct answer is: Technological innovation
Q.4 The Harrod-Domar model focuses primarily on:
Income distribution
Capital accumulation and growth
International trade
Price stability
Explanation - The Harrod-Domar model explains economic growth in terms of savings and investment. Higher savings lead to higher capital accumulation and growth.
Correct answer is: Capital accumulation and growth
Q.5 Which theory emphasizes self-reinforcing growth due to increasing returns and knowledge accumulation?
Rostow's stages of growth
Endogenous growth theory
Solow model
Lewis model
Explanation - Endogenous growth theory suggests that economic growth is generated from within the economy, particularly via human capital, innovation, and knowledge spillovers.
Correct answer is: Endogenous growth theory
Q.6 According to Rostow, which stage comes immediately after the 'Preconditions for Take-off'?
Drive to Maturity
Take-off
Age of High Mass Consumption
Traditional society
Explanation - Rostow's model progresses as: Traditional society → Preconditions for Take-off → Take-off → Drive to Maturity → Age of High Mass Consumption.
Correct answer is: Take-off
Q.7 In the Solow growth model, long-term growth depends primarily on:
Capital accumulation alone
Population growth and technological progress
Government spending
Trade surpluses
Explanation - The Solow model indicates that in the long run, growth is driven by exogenous technological progress and population growth rather than capital accumulation alone.
Correct answer is: Population growth and technological progress
Q.8 Which model assumes a dual-sector economy with a traditional agricultural sector and a modern industrial sector?
Rostow's model
Lewis model
Harrod-Domar model
Endogenous growth model
Explanation - The Lewis model divides the economy into a traditional, labor-surplus agricultural sector and a modern industrial sector that absorbs labor to promote development.
Correct answer is: Lewis model
Q.9 Which of the following is NOT a stage in Rostow's model of economic growth?
Take-off
Drive to Maturity
Technological Leap
Age of High Mass Consumption
Explanation - 'Technological Leap' is not part of Rostow’s five-stage growth model.
Correct answer is: Technological Leap
Q.10 According to the Harrod-Domar model, the growth rate of an economy is determined by:
Labor force and consumption
Savings and capital-output ratio
Government policy and taxation
Trade balance and exports
Explanation - The Harrod-Domar formula shows growth rate = savings ratio ÷ capital-output ratio, linking investment to economic growth.
Correct answer is: Savings and capital-output ratio
Q.11 Which economist emphasized 'creative destruction' as central to economic growth?
Rostow
Schumpeter
Lewis
Harrod
Explanation - Schumpeter's concept of creative destruction describes how new innovations replace old technologies, driving growth.
Correct answer is: Schumpeter
Q.12 The endogenous growth theory differs from the Solow model mainly because it:
Focuses on exogenous capital accumulation
Explains growth as internally generated by knowledge and innovation
Ignores population growth
Assumes fixed technology
Explanation - Endogenous growth theory emphasizes that economic growth results from internal factors such as human capital, innovation, and knowledge spillovers.
Correct answer is: Explains growth as internally generated by knowledge and innovation
Q.13 Which theory is considered linear and sequential in describing economic development?
Endogenous growth theory
Rostow's stages of growth
Harrod-Domar model
Lewis model
Explanation - Rostow proposed a linear, stage-by-stage approach to economic development.
Correct answer is: Rostow's stages of growth
Q.14 In the Lewis model, industrial sector growth is fueled primarily by:
Import substitution
Government subsidies
Transfer of surplus agricultural labor
Foreign aid
Explanation - The Lewis model assumes that industrial growth occurs by employing surplus labor from the agricultural sector, promoting economic development.
Correct answer is: Transfer of surplus agricultural labor
Q.15 Which growth model is most criticized for assuming a constant capital-output ratio?
Harrod-Domar model
Lewis model
Endogenous growth model
Solow model
Explanation - The Harrod-Domar model assumes a fixed capital-output ratio, which is unrealistic in dynamic economies.
Correct answer is: Harrod-Domar model
Q.16 Which of the following is a key feature of the Solow growth model?
Dual-sector labor transfer
Role of savings in short-term growth
Endogenous technological change
Trade balance dependency
Explanation - In the Solow model, savings affect short-term growth, but long-term growth depends on technological progress and population growth.
Correct answer is: Role of savings in short-term growth
Q.17 The concept of 'Take-off' in Rostow's model refers to:
Rapid industrialization and investment
High consumption stage
Traditional agricultural society
Technological stagnation
Explanation - During the Take-off stage, economies experience rapid growth due to high investment and industrialization.
Correct answer is: Rapid industrialization and investment
Q.18 Which theory explains economic growth as a result of policy, institutions, and internal incentives rather than external factors?
Harrod-Domar model
Endogenous growth theory
Rostow model
Lewis model
Explanation - Endogenous growth theory highlights that growth is driven by internal factors like human capital, innovation, and government policies supporting productivity.
Correct answer is: Endogenous growth theory
Q.19 Which model is considered more realistic for developing countries due to its focus on labor surplus?
Solow model
Lewis model
Harrod-Domar model
Rostow model
Explanation - The Lewis model addresses underdeveloped economies with surplus agricultural labor, making it relevant for developing countries.
Correct answer is: Lewis model
Q.20 According to Harrod-Domar, an increase in savings leads to:
Lower economic growth
Higher economic growth
No change in growth
Economic contraction
Explanation - In the Harrod-Domar model, higher savings finance investment, which raises capital stock and promotes growth.
Correct answer is: Higher economic growth
Q.21 In Rostow’s model, which stage is characterized by widespread adoption of mass consumption?
Drive to Maturity
Take-off
Age of High Mass Consumption
Preconditions for Take-off
Explanation - This final stage features high standards of living and widespread consumer goods consumption.
Correct answer is: Age of High Mass Consumption
Q.22 Which model introduced the concept of 'balanced growth' via investment in multiple sectors?
Rostow model
Harrod-Domar model
Lewis model
Endogenous growth model
Explanation - The Harrod-Domar framework emphasizes that coordinated investment across sectors is necessary to maintain steady economic growth.
Correct answer is: Harrod-Domar model
Q.23 Which growth theory challenges the assumption that technology is exogenous?
Endogenous growth theory
Solow model
Harrod-Domar model
Lewis model
Explanation - Endogenous growth theory endogenizes technological progress, making it an outcome of investment in knowledge and innovation.
Correct answer is: Endogenous growth theory
Q.24 In Lewis' model, the industrial sector can expand without reducing output in agriculture because:
Labor is fully employed in agriculture
There is surplus labor in agriculture
Technology in agriculture is stagnant
Capital is abundant in agriculture
Explanation - Surplus labor in the agricultural sector allows workers to move to industry without lowering agricultural output.
Correct answer is: There is surplus labor in agriculture