Economic Development: Meaning and Measurement
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Questions and Answers

What is the primary goal of economic development programs?

  • To improve the quality of life and economic well-being of a community. (correct)
  • To reduce unemployment rates.
  • To increase the government's tax revenue.
  • To incentivize businesses to relocate to a specific area.

    • Which of the following is NOT listed as a common positive outcome of economic development strategies?

  • Creating more jobs and job variety.
  • Reducing the national debt. (correct)
  • Promoting a community's assets.
  • Increasing the number of skilled workers in a community.

    • What is the significance of using net national product (NNP) over gross national product (GNP) as a measure of economic development?

  • NNP considers the depreciation of capital goods, which is a fairer measure of economic progress. (correct)
  • NNP focuses on the income of individual citizens instead of national income.
  • NNP is easier to calculate than GNP, making it more accessible for policymakers.
  • NNP only includes income from domestic sources, excluding foreign investments.

    • Which of the following is NOT considered a commonly used criterion for measuring economic development?

    <p>Increase in inflation rate. (D)</p> Signup and view all the answers

    What is the complexity of measuring economic development?

    <p>There is no universally agreed-upon index that perfectly captures economic development. (C)</p> Signup and view all the answers

    Which of the following is NOT a key factor in improving economic development?

    <p>Increasing military spending to protect national interests. (C)</p> Signup and view all the answers

    What is the main point of the statement "There is a group of certain economists which maintains the growth of national income should be considered most suitable index of economic development"?

    <p>There is a disagreement among economists about the best way to measure economic development. (C)</p> Signup and view all the answers

    According to the passage, what is R.G. Lipsey's perspective on measuring a country's economic development?

    <p>Developing a single index for measuring economic development is impossible, so multiple factors must be considered. (D)</p> Signup and view all the answers

    From the information provided, what is an example of a strategy that contributes to a community's economic development?

    <p>Investing in infrastructure for public transportation. (D)</p> Signup and view all the answers

    The text mentions national income and per capita real income. What is the key difference between these two measures?

    <p>National income is a broader measure that includes all income within a country, while per capita real income focuses on individual income. (A)</p> Signup and view all the answers

    Which of the following is NOT considered a drawback of using real national income as a measure of economic development?

    <p>It is too difficult to measure accurately. (B)</p> Signup and view all the answers

    Which economist(s) advocated for using per capita output as a key indicator of economic development?

    <p>Harvey Leibenstein, Rostow, Baran, Buchanan (B)</p> Signup and view all the answers

    What are the two key components of economic welfare that contribute to higher levels of economic development?

    <p>Equal distribution of national income and price stability. (A)</p> Signup and view all the answers

    What is a significant drawback of using the standard of living as a criterion for measuring economic development?

    <p>It is subjective and difficult to measure objectively. (A)</p> Signup and view all the answers

    How does the occupational structure change as a country progresses towards economic development?

    <p>The percentage of the population working in the primary sector declines, while the percentage of the population working in the secondary and tertiary sectors increases. (B)</p> Signup and view all the answers

    Which of the following is NOT a criterion discussed in the text for measuring economic development?

    <p>Human Development Index (HDI) (C)</p> Signup and view all the answers

    What is the primary objective of economic development?

    <p>To increase the standard of living of the population. (A)</p> Signup and view all the answers

    Which of these is NOT considered a factor influencing the purchasing power of money, as discussed in the text?

    <p>The growth of the trade sector (B)</p> Signup and view all the answers

    What is the central argument of the text about the relationship between economic development and per capita income?

    <p>Per capita income, while important, is not the sole measure of economic development. (C)</p> Signup and view all the answers

    Which of the following statements accurately reflects the authors' perspective on measuring economic development?

    <p>Economic development is a multifaceted concept that requires a multi-dimensional approach to measurement. (B)</p> Signup and view all the answers

    Flashcards

    Economic Development

    Programs and policies aimed at improving a community's economic well-being and quality of life.

    Goals of Economic Development

    Common aims include job creation, business retention, and improved quality of life.

    National Income

    Total income earned by a country's residents, often used to measure economic development.

    Net National Product (NNP)

    A better measure than GNP; it accounts for depreciation and indicates national progress.

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    Per Capita Real Income

    Average income per person in a specific area, crucial for economic assessment.

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    Social Capital

    Networks and relationships that enable a community to work together effectively.

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    Economic Welfare

    The overall well-being of individuals and groups in an economy.

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    Standard of Living

    The degree of wealth and material comfort available to a person or community.

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    Unexploited Resources

    Natural or economic resources that have not been utilized in development.

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    Economic Diversity

    Variety in economic activities and industries within a community.

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    Per Capita Income

    Average income earned per person in a given area.

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    Aggregate Output

    Total production of goods and services in an economy.

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    Comparative Concept of Development

    Measuring economic development through comparisons over time or between regions.

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    Occupational Structure

    Distribution of workforce across different economic sectors.

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    Primary Sector

    Economic sector focused on natural resource extraction (e.g., agriculture).

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    Secondary Sector

    Sector involving manufacturing and industrial processes.

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    Tertiary Sector

    Sector related to service provision rather than goods production.

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    Real National Income

    Total income of a country adjusted for inflation and population size.

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    Study Notes

    Economic Development: Meaning and Measurement

    • Economic development encompasses programs, policies, and activities aiming to enhance a community's economic well-being and quality of life. This involves building wealth, diversifying the economy, creating jobs, and strengthening the tax base.
    • Key objectives of economic development strategies often include job creation and variety, attracting and retaining businesses, improved quality of life, increased tax revenue, more productive property use, and leveraging community assets.
    • Economic development is a long-term process of change.

    Measuring Economic Development

    • Measuring economic development lacks a universally accepted, single index.
    • Commonly used measures include national income, per capita real income, comparative analysis, standard of living, economic welfare, and occupational patterns.

    National Income as an Index

    • Some economists believe national income growth is a suitable measure of economic development.
    • Net National Product (NNP) is preferred over Gross National Product (GNP) to gauge progress.
    • Per capita income alone doesn't adequately reflect development; population growth needs consideration.

    Per Capita Real Income

    • Economic development should improve living standards, meaning increased aggregate output.
    • A key indicator is the rise in real per capita income over time.
    • Various scholars (e.g., Leibenstein, Rostow) highlight the significance of per capita output.

    Economic Welfare as an Index

    • Recognizing limitations of national income-based measures, some economists advocate for economic welfare as a development indicator.
    • Economic welfare involves equitable income distribution and price stability.
    • Higher economic welfare typically correlates with greater economic development.

    Comparative Concept

    • Economic development is analyzed comparatively; comparison with other countries or within the country over time (across periods) provides insights.

    Occupational Pattern Measurement

    • The distribution of the workforce across sectors (primary, secondary, and tertiary) signals economic progress.
    • Transition from primary to secondary/tertiary sectors indicates development.
    • A declining primary sector and growing secondary/tertiary sectors denote economic advancement.

    Standard of Living Criterion

    • Standard of living, not just per capita income, reflects economic success.
    • An improved standard of living signifies provision of a better life for people.
    • Average consumption level is key.
    • However, this method has limitations due to subjective nature and potential manipulation by taxation.

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    Description

    Explore the concepts of economic development and its measurement in this quiz. Understand the key objectives of economic development strategies and the various indices used to gauge progress, such as national income and quality of life. Test your knowledge on the long-term processes that contribute to enhancing community well-being.

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