Lesson 4.3.2

4.3.2 Factors influencing growth and development Quiz: Pearson Edexcel Economics, Unit 4

20 questions

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Lesson 4.3.2, Factors influencing growth and development: 20 multiple choice questions for the Pearson Edexcel Economics (9EC0), Unit 4: Theme 4: A global perspective, written with Revision Ninja.

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The 20 questions

  1. Heavy reliance on exporting raw materials or agricultural goods is known as what?

    • Foreign currency gap
    • Primary product dependency
    • Dutch disease
    • Capital flight

  2. What main economic variable becomes unstable due to commodity price volatility?

    • Population growth
    • Export revenue
    • Human capital
    • Property rights

  3. In the Harrod-Domar model, if savings rate s = 0.2 and capital-output ratio v = 4, what is growth?

    • 5%
    • 20%
    • 2.5%
    • 0.8%

  4. An economy needs 25% of GDP in investment but saves 15%. What is its savings gap?

    • 40% of GDP
    • 10% of GDP
    • 1.67% of GDP
    • 15% of GDP

  5. What term describes a country having insufficient foreign exchange earnings to fund essential capital imports?

    • Foreign currency gap
    • Savings gap
    • Capital flight
    • Fiscal deficit

  6. What term describes the rapid outflow of financial assets from a country due to instability?

    • Foreign direct investment
    • Brain drain
    • Debt servicing
    • Capital flight

  7. Which demographic trend increases the dependency ratio and spreads public resources thinly in developing nations?

    • Rural-urban migration
    • Increased life expectancy
    • Falling birth rates
    • Rapid population growth

  8. High external debt repayments hinder development mainly by reducing funds available for what?

    • Public investment
    • Population control
    • Inflation control
    • Import tariffs

  9. How does improved access to credit and banking primarily support economic development for small firms?

    • Reduces trade deficits
    • Eliminates exchange risk
    • Increases tax rates
    • Enables business investment

  10. How does poor infrastructure, such as inadequate transport networks, mainly limit economic growth?

    • Increases savings rates
    • Lowers tax revenues
    • Raises production costs
    • Reduces interest rates

  11. What direct economic benefit does investing in education and human capital provide?

    • Lower capital mobility
    • Reduced tax revenues
    • Lower currency value
    • Higher labour productivity

  12. What is the main consequence of an absence of legally protected property rights?

    • Higher export revenues
    • Lower inflation rates
    • Increased capital flight
    • Reduced investment incentive

  13. Which non-economic factor directly deters investment and disrupts production in developing countries?

    • High interest rates
    • Political instability
    • Savings gap
    • Primary product dependency

  14. Why does primary product dependency cause severe export revenue fluctuations?

    • Volatile commodity prices
    • Stable global demand
    • Fixed exchange rates
    • High domestic savings

  15. Combining high external debt with falling commodity export prices creates what major economic problem?

    • Rapid capital influx
    • Foreign currency squeeze
    • Deflationary growth
    • High domestic savings

  16. Which key factor driving economic growth is ignored by the Harrod-Domar model?

    • Technology
    • Savings
    • Investment
    • Capital stock

  17. Which of the following is classified as a non-economic factor influencing economic development?

    • Capital flight
    • Infrastructure
    • Political stability
    • Primary product dependency

  18. Primary product dependency occurs when a country relies heavily on exports of which goods?

    • Financial services
    • Manufactured goods
    • Raw commodities
    • Consumer electronics

  19. If a country has a savings rate of 12% and capital-output ratio of 3, what is its Harrod-Domar growth rate?

    • 36 per cent
    • 0.04 per cent
    • 4 per cent
    • 25 per cent

  20. Which situation creates a foreign currency gap in a developing economy?

    • Insufficient export earnings
    • Low import demand
    • Excess foreign investment
    • High domestic savings

All Pearson Edexcel Economics quizzes