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2. Theory
 Is an attempt to define a relationship of Factors
which give rise to a particular condition or
situation.
 It is a statement about the behavior of
dependent variables under a given set of
assumed behavior or movement of one or
several independent variables that can
influence the motion of the dependent
variables.
 It is a concept of interaction that is expected to
bring about a predictable outcome.

3. A theory is necessary in the discussion of a
situation because it guides the discussant towards
a conclusion.
The formulation of theory is essential to the
establishment of a law or principles through the
repeated and precise relationship of the factors
taken into consideration.

4. The most prominent ideas on
the stages of development
comes from Walt Whitman
Rostow who divided the
development stage into five:

5. This is the situation in a society wherein the
people depend upon the land as basic resources
for their livelihood and where the production
techniques are more or less the same for many
years.

6. True or False. Theory is
necessary in the discussion of a
situation because it guides us
toward conclusion and to prove the
created principle or law.
Answer: False

7. This is the awakening
stage when new
methods of production
are adopted and the
society begins to put
up its infrastructure
for better growth.
This stage is the result
of jolting effect on the
economy by education,
war or the inflow of
foreign technology.

8. This is the stage of
acceleration of economic
activity in the economy.
By this time the
productive activity has
expanded through
technological change and
increased investment.
Employment is high and
the domestic and foreign
markets are being fully
developed.

9. This stage is the period of rapid technological
change, introduction of new management
methods, expansion of international trade and
extensive use of credits.

10. It is said to be the stage
of acceleration of
economic activity in
the economy.
Answer: Take-off Stage

11. The benefits of specialization and automation
brings about a high level of income to the
population thus giving them access to n
abundance of consumption goods.
Education for professional training is
emphasized.
World market becomes the target for domestic
production.

12. Identify what theory of developmental
stages is being stated below:
A period of rapid technological change and
introduction of new method, expansion of
international trade and extensive use of
credit.
Answer: Drive to
maturity stage

13. Adam Smith pointed out that a country will grow
economically if the people would accumulate capital via
savings and gains from trade. (Hierschman 1958).
When Laissez faire or free enterprise prevails, the resources
of the country are allocated into efficient uses by what Adam
Smith referred to as an “invisible hand in the economy.
Smith advocated the minimal intervention of the
government.
The wealth of the nation is in its enterprises development,
labor productivity and capital formation.

14. The economy will continue to grow for as long as
people worked the land on profitable basis so that
profit for the entrepreneurs and the wage for labor
would results in accumulated savings which turn
can be used for capital formation.
Ricardo concluded that it is not profitable to work
on land that will only produce the equivalent of
whatever has been spent on production and the
returns will later diminish.

15. True or False. Precondition
stage is the stage in which the
people depend on the land as
the fundamental resources.
Answer: False

16. This theory indicates that as population grows,
food production can cope less and less with the
food requirement of the society so that the
quality of life will fall.
 the growth of the economy would depend on
providing an optimal land-labor ratio but this
will only be true in a short time.
Malthusian theory find support among those
who believe that population growth will
ultimately leads to starvation of human race
unless population growth is checked.

17. The theory holds that the economy can be
stabilized and stirred to growth by injecting
income into the economy which will in turn spur
new productive efforts among the enterprises.
Compensatory spending to remedy a deflation
The public sector can provide a new investments
to offset the savings that were not invested.

18. According to him the economy will continue to
grow for as long as people worked the land on
profitable basis so that profit for the
entrepreneurs and the wage for labor would
results in accumulated savings which turn can be
used for capital formation.
Answer: David Ricardo

19. This theory emphasized that growth is
determined by the capital-output ratio and the
marginal propensity to save.
Savings lead to investment which in turn leads
to increase in income and leads to more savings
and so goes the cycle.
One very critical assumption of this theory is
that savings and investment are equal (Hagen,
1965).

20. He placed emphasis on the role of the entrepreneur
as an innovator in the development of the business
organization and the economy.
The economy should not only take technological
change as one of the paths to growth and
development but must make that technological
change as central strategy.
He theorized that the development of the business
organization and the economy is dependent on the
chain of innovations that can be produced. (Pack,
1986).

21. Who divided the theory of
developmental stage into
five?
Answer: Walt Whitman
Rostow

23. Analogy:
John Maynard Keynes: The General Theory
Schumpeter : _________________
Answer: Theory of
technological
Change.

24. It is generally believe by many economic
thinkers that the benefits of development will
drip down from the higher income groups to the
masses so there is no need to plan growth with
redistribution.

25. It is held that a poor country has little capital.
Because of this, it can invest little and can
therefore have little production.
Due to little production, employment is less and
so income is low.
It can be broken through the injection of capital
from foreign sources.

26. There is a limit to how much a country can
borrow from other countries and the
international leading institutions.
This theory does not take into consideration
that lenders may condon the dept, restructure
it, or that the debtor may unilaterally repudiate
its own indebtedness through a change of
government.

27. Many economists believe that a country should
balanced its development of its agricultural,
commercial and industrial sectors so that it can
avoid complications such as the loss of the
agricultural base through sudden shift to
industrialization, slow growth through over-
emphasis of agricultural production and failure
to find the market to match the growth of
agriculture and industry.

28. What is the complete name
of our teacher in this
subject?
Answer:
Ms. April Joy M. Guazon

29. They stress that the most fundamental resource
is man power which can translate its capacity to
productivity and economic development of the
country as had been demonstrated by the newly
industrialized countries like South Korea and
Taiwan.

30. • According to this theory that there is
a limit to how much a country can
borrow from other countries and
international leading institution.
Answer: Dept Trap
Theory

31. There is rigidity in technology
New investment are required to change in
technology
He contended that more investment will lead to
more technological change and consequently to
more investment.
The growth rate for capital investment in the
economy, the total output and the productivity
of labor.

32. What is the course Code and
Course Description of this
Subject?
Answer:

33. This is directed at maintaining a balance
between preserving the environment on one
hand and enhancing the productivity of
agriculture and industry on the other.
The difficulty to adhere to this concept is
because poor countries where the masses suffer
from environmental degradation can not help
but aggravate the destruction of the
environment because they must survive.

34. Enumerate the theory of
developmental stages by
Rostow.