25 MCQ on Welfare Economics and Development

1. Welfare economics is primarily concerned with: a) Maximizing social welfare and utility b) Maximizing individual utility c) Maximizing government revenue d) Maximizing economic growth Answer: a) Maximizing social welfare and utility

2. The concept of "Pareto efficiency" in welfare economics implies: a) No individual can be made better off without making someone else worse off b) The government should intervene in all economic transactions c) Government control over all economic resources d) Economic decisions should be based on majority preference Answer: a) No individual can be made better off without making someone else worse off

3. "Gini coefficient" is a measure of: a) Income inequality b) Economic growth c) Poverty rate d) Consumer price index Answer: a) Income inequality

4. The "Human Development Index (HDI)" considers which of the following factors? a) Life expectancy, education, and income b) GDP growth, inflation rate, and unemployment c) Industrial output, trade balance, and literacy rate d) Total population, land area, and natural resources Answer: a) Life expectancy, education, and income

5. "Poverty line" is defined as: a) The minimum income needed to meet basic necessities of life b) The maximum income allowed for a person to be considered wealthy c) The average income of a nation's population d) The income earned by the majority of the population Answer: a) The minimum income needed to meet basic necessities of life

6. The concept of "efficiency" in welfare economics refers to: a) Maximizing the total benefit in the economy b) Maximizing government control over resources c) Minimizing the role of the private sector d) Minimizing taxes and regulations Answer: a) Maximizing the total benefit in the economy

7. "Sustainable development" refers to: a) Development that meets the needs of the present without compromising the ability of future generations to meet their own needs b) Rapid and unchecked economic growth c) Focusing only on short-term development goals d) Development that prioritizes economic growth at any cost Answer: a) Development that meets the needs of the present without compromising the ability of future generations to meet their own needs

8. "Foreign Direct Investment (FDI)" is: a) Investment made by a foreign entity into the economy of another country b) Investment made by the government within its own country c) Investment made by individuals within their own country d) Investment made by a domestic entity into a foreign country's economy Answer: a) Investment made by a foreign entity into the economy of another country

9. The "Multi-dimensional Poverty Index (MPI)" measures poverty based on: a) Multiple factors including health, education, and standard of living b) Only income and economic indicators c) Social and political factors d) Access to government services Answer: a) Multiple factors including health, education, and standard of living

10. "Market failure" occurs when: a) Markets do not efficiently allocate resources to achieve the maximum benefit for society b) Governments intervene too much in the market c) Prices are too high in the market d) There is no government regulation in the market Answer: a) Markets do not efficiently allocate resources to achieve the maximum benefit for society

11. The "Poverty Alleviation Program" aims to: a) Reduce poverty through targeted interventions and support b) Encourage wealthy individuals c) Promote income inequality d) Reduce government spending Answer: a) Reduce poverty through targeted interventions and support

12. "Sustainable Development Goals (SDGs)" were adopted by the United Nations to address global challenges and promote development in various areas. How many goals are there in total? a) 17 b) 10 c) 7 d) 25 Answer: a) 17

13. "Social safety nets" are programs designed to: a) Protect individuals and families from economic shocks and poverty b) Promote risky behavior and dependency c) Ensure equal distribution of wealth d) Discourage economic growth Answer: a) Protect individuals and families from economic shocks and poverty

14. "Gross Domestic Product (GDP)" is the total value of all: a) Goods and services produced in a country during a specific time period b) Money in circulation within a country c) Taxes collected by the government d) Foreign aid received by a country Answer: a) Goods and services produced in a country during a specific time period

15. The "Tragedy of the Commons" refers to: a) The overuse and depletion of shared resources due to self-interest and lack of regulation b) The efficient allocation of resources in a market economy c) The efficient management of public goods by the government d) The equitable distribution of resources among all individuals Answer: a) The overuse and depletion of shared resources due to self-interest and lack of regulation

16. "Inflation" refers to: a) A sustained increase in the general price level of goods and services in an economy b) A sustained decrease in the general price level of goods and services in an economy c) The total value of goods and services produced in a country d) The overall decrease in economic activity in a country Answer: a) A sustained increase in the general price level of goods and services in an economy

17. The concept of "opportunity cost" is best defined as: a) The value of the next best alternative that must be forgone when a choice is made b) The monetary cost of an opportunity c) The total cost of all available opportunities d) The cost of goods and services in the market Answer: a) The value of the next best alternative that must be forgone when a choice is made

18. "Brain drain" refers to: a) The emigration of highly skilled and educated individuals from one country to another b) The migration of unskilled workers from one country to another c) The movement of individuals from rural to urban areas within a country d) The movement of individuals from urban to rural areas within a country Answer: a) The emigration of highly skilled and educated individuals from one country to another

19. "Public goods" are characterized by: a) Non-excludability and non-rivalry in consumption b) Excludability and rivalry in consumption c) Non-excludability and rivalry in consumption d) Excludability and non-rivalry in consumption Answer: a) Non-excludability and non-rivalry in consumption

20. "The Laffer Curve" illustrates the relationship between tax rates and: a) Tax revenue b) Government expenditure c) Inflation rate d) Unemployment rate Answer: a) Tax revenue

21. "Economic inequality" is often measured using: a) The Gini coefficient b) The Consumer Price Index (CPI) c) Gross Domestic Product (GDP) d) The Poverty Line Index Answer: a) The Gini coefficient

22. "Microfinance" refers to: a) Financial services provided to low-income individuals or small businesses lacking access to traditional banking services b) Large-scale financial transactions within a country c) Financial services provided to high-income individuals d) Financial services provided to government entities Answer: a) Financial services provided to low-income individuals or small businesses lacking access to traditional banking services

23. "Stagflation" is a situation characterized by: a) High inflation and high unemployment b) High inflation and low unemployment c) Low inflation and high unemployment d) Low inflation and low unemployment Answer: a) High inflation and high unemployment

24. The "Social Mobility" index measures: a) The ability of an individual or family to move up or down in social or economic status b) The total income of a nation c) The population growth rate d) The rate of urbanization Answer: a) The ability of an individual or family to move up or down in social or economic status

25. "Diversification" in investment refers to: a) Spreading investments across various assets to reduce risk b) Investing in a single asset to maximize returns c) Investing only in stocks d) Keeping all investments in cash Answer: a) Spreading investments across various assets to reduce risk