UWA ECON2106 exam prep questions
well answered
Do you agree with the following statement? Explain. "The contribution of India's major reforms
of 1991 to its economic growth has been overrated because the growth rate in India had
already shifted in the 1980s, making it impossible to credit the 1991's reforms with the
improved performance of India." - correct answer ✔✔ Disagree as the 1990's reforms were
much more comprehensive and argues that the growth experienced from 80's reforms would
not have been possible without the 90's reforms.
Why did growth accelerate in the 1980s and 1990s in India? - correct answer ✔✔ Trade
liberalization ( reduction in barriers to trade)
1980's - Expansion of OCL list - number of goods that did not need a license to import were
expanded massively
1990's - Abolished the OCL list - changed to a negative list where it instead listed what couldn't
be imported. All capital and intermediate goods could be imported without licensing + tariff
rates reduced substantially
analysing the economy in India vs China - correct answer ✔✔ Analysing the economy in 3
sectors - Agriculture, Industry and services
Agricultural - Indias agriculture productivity grew at a much lower rate than China's but
emoployment growth continued until 2004, reflecting limiting opportunities in the economy
Industry - China had high growth in labour productivity - mainly achieved by high growth in
physical capital per worker and TFP growth with little contribution from employment growth
India also had high industry growth but it was mainly from employment growth and labour
proctivity growth was only 1/3 of china's
, Services - accounts for 50% of India's GDP compared to 33% in China. India beats china in both
TFP growth and labour productivity growth in the services sector.
What are some critical factors to explain the differences in economic growth of China and India -
correct answer ✔✔ •Initial conditions favoured higher growth in China
-Education and health standards were higher in China
-Better infrastructure in China (even then)
-Market distortions in China were more severe in China which means their correction offered
greater potential growth.
•China's concentration on economic development
-After the horror of the Cultural Revolution, Chinese people were ready for change.
-It is much difficult for India to achieve a national goal of economic growth without the full
cooperation between the major political parties.
China's faster urbanisation
China has a much higher saving and investments rate
India was dependent on monsoon season for agriculture
4 stages of demographic transition - correct answer ✔✔ •First stage: high birth rate and high
mortality rate. This stage is marked by low income and low population growth. Some low-
income countries in Sub-Saharan Africa are still at this stage today.
•Second stage: high birth rate and middle mortality rate. This stage is marked by improvement
in nutrition and sanitation as a country develops. Income increases but birth rate remains high,
leading to increases in population growth (demographic dividend).
well answered
Do you agree with the following statement? Explain. "The contribution of India's major reforms
of 1991 to its economic growth has been overrated because the growth rate in India had
already shifted in the 1980s, making it impossible to credit the 1991's reforms with the
improved performance of India." - correct answer ✔✔ Disagree as the 1990's reforms were
much more comprehensive and argues that the growth experienced from 80's reforms would
not have been possible without the 90's reforms.
Why did growth accelerate in the 1980s and 1990s in India? - correct answer ✔✔ Trade
liberalization ( reduction in barriers to trade)
1980's - Expansion of OCL list - number of goods that did not need a license to import were
expanded massively
1990's - Abolished the OCL list - changed to a negative list where it instead listed what couldn't
be imported. All capital and intermediate goods could be imported without licensing + tariff
rates reduced substantially
analysing the economy in India vs China - correct answer ✔✔ Analysing the economy in 3
sectors - Agriculture, Industry and services
Agricultural - Indias agriculture productivity grew at a much lower rate than China's but
emoployment growth continued until 2004, reflecting limiting opportunities in the economy
Industry - China had high growth in labour productivity - mainly achieved by high growth in
physical capital per worker and TFP growth with little contribution from employment growth
India also had high industry growth but it was mainly from employment growth and labour
proctivity growth was only 1/3 of china's
, Services - accounts for 50% of India's GDP compared to 33% in China. India beats china in both
TFP growth and labour productivity growth in the services sector.
What are some critical factors to explain the differences in economic growth of China and India -
correct answer ✔✔ •Initial conditions favoured higher growth in China
-Education and health standards were higher in China
-Better infrastructure in China (even then)
-Market distortions in China were more severe in China which means their correction offered
greater potential growth.
•China's concentration on economic development
-After the horror of the Cultural Revolution, Chinese people were ready for change.
-It is much difficult for India to achieve a national goal of economic growth without the full
cooperation between the major political parties.
China's faster urbanisation
China has a much higher saving and investments rate
India was dependent on monsoon season for agriculture
4 stages of demographic transition - correct answer ✔✔ •First stage: high birth rate and high
mortality rate. This stage is marked by low income and low population growth. Some low-
income countries in Sub-Saharan Africa are still at this stage today.
•Second stage: high birth rate and middle mortality rate. This stage is marked by improvement
in nutrition and sanitation as a country develops. Income increases but birth rate remains high,
leading to increases in population growth (demographic dividend).
