Economic Development Varghese Exam 1 (Exercises)

Which one of the following countries is not a member of the "BRICS"

Indonesia (China, Russia, South Africa are)

Ukraine comes from which of the following groups of countries?

Transitional

The poorest nations in the world, representing 12 percent of humanity, are primarily located in:

Sub- Saharan Africa

______ of the world's population live in LDCs.

Roughly 80%

If a country achieves a rapid increase in per capita income by discovering new oil reserves, it is experiencing:

Growth but not development

Which term does not belong with the others?

North

Statistical indicators of health and education, across countries, bear no significant correlation to differences in per capita income.

False

The terms economic growth and economic development are interchangeable, both referring to a rise in national income per capita.

False

Economic development implies, more particularly, improvements in

Health, education, and other aspects of human welfare.

Which of the following is an example of development without growth?

Cuba

Which of the following is an example of growth without development?

Qatar

Development is easier with growth because of

Growth generates extra income to spend;

Less conflict created by growth

(Both (a) and (b))

The co- existence of DCs with LDCs in general has provided

Positive environment for LDCs;

Negative environment for LDCs

(Both (a) and (b))

Markets in LDCs

May not work well because of lack of institutions;

Can lead to failures which governments attempt to rectify;

May fail due to externalities

(All the above are reasons that markets could fail)

Which indicator is inversely related to per capita income?

Adult illiteracy rate (note it is adult illiteracy rate, not literacy rate)

Poland comes from which of the following groups of countries?

Transitional

Above is a graph of how much GNI per capita predicts life expectancy. For the country of Indonesia, its actual life expectancy is _____ than the predicted (or average) relationship.

Greater

All the reasons are genuine reasons for why people (depending on their personal interests) would study developing countries except

They constitute most of the world area wise and population wise;

A professional who works for the US civil service who might work abroad.;

A person who wants world peace

(All of the reasons above are actual reasons why people would study LDCs)

The reason the Third World is called the Third World is because

At the time the First World were market economies, the Second World were centrally planned economies so the other countries were termed the Third World.

Which of these countries is not part of MINT?

Taiwan (Mexico, Indonesia, Nigeria are)

Which of the following would not be part of a definition or description of

development?

Income (not HDI, just the standard definition of development)

LDC is an acronym for ____

Less developed country

Which of the following countries is not a member of BRICS?

Indonesia (Brazil, Russia, South Africa are)

Roughly ____ of the world's population lives in LDCs.

80% (now actually 85%)

LDC is an acronym for _____

Less developed country

An example of GROWTH with NOT MUCH development is (country)

Qatar and Kuwait

These are examples of development without much growth:

Cuba and Sri Lanka

Phase II differs from the other phases in development though with its emphasis on ______

development (because growth did not trickle down)

The phase with the greatest intervention is _____

Phase II (because this is when growth was not working and they focused on

development which requires more government intervention__or Phase I where even

though growth was the objective people had pessimism in the market

In 2009, Bangladesh's GNP was 9 percent higher than its GDP; this occurred

due to the fact that:

Large numbers of Bangladeshi men and women work abroad.

A country's nominal GNP for a given year is defined as the total market

value of:

All final goods and services produced. (this is somewhat a review of Intro Macro)

In order to effectively compare levels of GDP per capita across countries, it

is necessary to convert GDP per capita into a:

Common currency

Most economists agree that an effective way of comparing income levels

between countries around the world is through the use of:

Purchasing power parity.

The human development index is a composite of three basic measures of

human welfare. Which of the following is NOT a component of the human

development index

Infant mortality rate

For which of the following countries is the divergence between GNP per capita

measured at official exchange rates and at purchasing power parity (PPP)

likely to be largest?

Ethiopia (poorest countries have the largest divergences)

Which of the following is true about GDP/GNP?

GDP accounts for all production within the borders of a country;

GNP accounts for all income earned by citizens of a country;

GDP and GNP measure close to identical things

(All of the above)

Based on Maddison's research, with the Netherlands growing at .2 % the world

leader for much time, average income doubles in:

350 years

Which country is an example of a place where GNP is higher than GDP?

Philippines

According to Maddison, rapid economic growth in the world's per capita

income as we know it began around the year:

1820

Which country is an example of a place where GDP is higher than GNP?

Qatar

The Rule of 70 applies to which of the following topics?

Doubling time

Which of the following is NOT an example of a non-traded good or service?

Car (haircut, meal, elementary school education are)

Which of the following is NOT a part of the Human Development Index?

Level of infrastructure

For a country where income per capita is growing by 2 percent per year, how

many years will it take for average incomes to double?

35 years

GNP or GDP divided by total population provides a measure of:

Per capita income

The Human Development Index (HDI) is a composite of three basic measures of

human welfare. Which of the following is not a component of the HDI?

Infant Mortality Rate (Life Expectancy, Mean Years of Schooling, Expected Years of Schooling are)

What is the special significance on non-traded goods in relation to GNP

measurement problems?

The exchange rate method for international comparisons improperly values non

traded goods.

For a developing country like Pakistan, it depends on many remittances from

abroad but does not have as many foreigners working in Pakistan, so for it,

GNP > GDP

Angola's GNP per capita rank is much higher than its HDI rank. Most likely most

of Angola's revenues come from

Oil

Which of the following is an example of a non-traded good or service?

Massage

Even though GNP@PPP corrects for some problems, other issues arise from its

use such as:

It does not account for differences in quality of goods;

LDCs do not like its use;

Some analysts do not like to use for countries that are very different

(All of the above)

When we convert GNP using the exchange rate method and later use the PPP

method, for which groups of countries do their GNP rise the most?

LDCs

Which of the following was not considered the world leader in growth during any

of the periods we considered?

Germany (the Netherlands, the USA are)

In a article in 1997, Newsweek claimed that China will catch up to the US in 2017!

For this to be true, they needed to assume that:

China's growth rate will continue at the same rate;

US growth rate will continue at the same rate;

The indicator used is the income measure and not the income per capita measure

(All of the above)

For a country where income per capita is growing by 4 percent per year, how

many years will it take for average incomes to double?

17.5 years

The goal posts for GNP per capita are stated as min =100, max = 75,000. Find the

GNP index for Costa Rica if Costa Rica's GNP per capita is $ 14,420.

a. One cannot find it, we need education and health indices too.

.75

Which of the following regions grew the most in the 2000s

East Asia and the Pacific

To arrive at "g," our growth measure, which one of the data do we not use:

Global warming emissions, to correct for environmental damage

Foreigners income which is spent inside the country is included in

GDP and GNI

India falls into the following category:

South Asia

In practice, we should use GNP@exchange rates over GNP@PPP

For countries which have different levels of economic development

In class, I asked you to answer the following questions to explore the relationship between

female literacy and real GNI per capita.

If we wanted to test this, what would our hypothesis be?

As income increases, we expect female literacy to rise because more income can be spent

on social investments and generally people demand more rights to be included in the greater

income.

In class, I asked you to answer the following questions to explore the relationship between

female literacy and real GNI per capita.

What do we expect the sign of the slope to be?

We expect the slope to be positive

In class, I asked you to answer the following questions to explore the relationship between

female literacy and real GNI per capita.

Looking at the regression line in our slides, does it confirm our expectation?

Yes, the regression line (shows the average relationship) is sloping upward

Sri Lanka's prime minister wants to double its income (GNP per capita) in 7

years. How fast does it have to grow to achieve this goal (in %)?

10 (70/x =2, x=10. Note the power of this result - it is independent of knowing the GNP

per capita.)

In class, I asked you to answer the following questions to explore the relationship between

female literacy and real GNI per capita.

Going back to Sri Lanka, Saudi Arabia, and the US, do you think they are outliers, if so

why do you think they are (try to use positive arguments, not normative ones)?

We would consider Sri Lanka and Saudi Arabia outliers - just an eyeball test. The US is not

on the line but not too far from it. If we had an imaginary vertical line and moved it from

the x-axis upwards, you would find that Sri Lanka's Female Literacy Rate should be lower.

We have already mentioned Sri Lanka as high on development and female literacy rate is on

par with that, including education and women in their development strategy. Again, if we do

the same exercise for Saudi Arabia, we find that their female literacy rate is lower than

predicted for their income. Women only constitute 13 % of the working force in Saudi

Arabia, and thus there are not high returns from education. Thus, the incentive to invest in

education is low in Saudi Arabia which taken to the extreme would mean that women and

society believe that it is not necessary for women to be literate.

In LDCs most people believe _____ is the world's superpower while in DCs most

believe _____ is the superpower.

USA; China

Which would describe the Project Quest's in San Antonio pool of clients for training

the best?

About 30, looking for a second chance