Practice final

Practice final. &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; Spring 2005

Name:______________________= _ &= nbsp; &nbs= p; Economics of Development

Each question is worth the total number of points in parentheses; sub-questions are allocated an equal share of the total points= per question. Final is worth 30 p= oints.

1) Popul= ation issues (3 points)

a. What is meant by the hidden momentum of population growth?

b. Draw and describe the demographic transition.

2) True = or False (6 points)

Statement	Circle whether the statement is true or false
The informal sector is defined as the sector in an e= conomy that deals in illegal activities.	True &nbs= p; False
Import substitution strategies can increase the ince= ntive to locate production in the largest city of a country.	True &nbs= p; False
Evidence suggests that taller people earn more than shorter people.	True &nbs= p; False
There is a negative correlation between GNP rank and= the WHO ranking of health system performance.	True &nbs= p; False
The Harris-Todaro migration model suggests urban job creation schemes may increase the urban unemployment rate.	True &nbs= p; False
The social rate of return to education is highest at= the university level for Asia.	True &nbs= p; False
The poverty gap measure is constructed as an index of depravations associated with poverty.&nb= sp;	True &nbs= p; False
Educated females have lower total fertility rates th= an uneducated females overall.	True &nbs= p; False
Urbanization is a concern in development since evide= nce suggests a higher share of total population living in urban areas is negatively correlated with GNI per capita.	True &nbs= p; False
The current population of the world is estimated to = be around 6.1 billion people.	True &nbs= p; False
Food production per capita in Africa has decreased since 1970.	True &nbs= p; False
Some countries in the world are currently experienci= ng negative population growth rates.	True &nbs= p; False

3) Poverty measures. (3 points)

Person number	Income per day
1	$0.05
2	$0.45
3	$0.50
4	$1.50
5	$2.50
6	$2.75
7	$3.25
8	$14.00

TOTAL INCOME &nbs= p; &= nbsp; &nbs= p; &= nbsp; $25.00

a) What = is the total poverty gap, the average poverty gap, and= the normalized average poverty gap if the poverty line is defined as $1 per per= son per day?

b) What = is the headcount and the headcount index if the povert= y line is defined as $2 per person per day?

c) What = share of total income is held by the lowest quartile and what share is held by the highest quartile?

4) Can t= he “inverse farm size – productivity” relationship be used to justify in efficiency terms a land redistribution policy in a latifundio-minifundi= o agrarian system? Why or why n= ot. (1 point)

5) Inequality. (2 points)=

a. Draw and interpret an education Lorenz curve.

b. Explain how to derive a Gini coefficient from this = Lorenz curve.

c. Does cross country evidence suggest that a country’s education Gini coefficient is positively or negatively rela= ted to the country’s average years of education? Explain.

6) Health issues. (2 points)

Statement	Circle whether the statement is true or false
Overnutrition is categorized as a type of malnutriti= on.	True &nbs= p; False
Weight for age measures are used to identify current malnutrition.	True &nbs= p; False
The Bhargava et al artic= le in the reader reports that they find no evidence that improved health leads = to faster GDP growth rates in low-income countries	True &nbs= p; False
Estimates suggest over 40% of the global disease bur= den as measured by DALYs occurs in the developed wor= ld.	True &nbs= p; False

7) Trage= dy of the commons. (3 points).

Fisherperson A and fisherperson B can choose to put 1<= span class=3DGramE>,2, or 3 fishing boats in the waters off the coast of = their village. Payoffs are as descr= ibed in each cell of the matrix, with payoff to fisherperson A on the left hand side, payoff to fisherperson B on the right hand side.

	&nbs= p; &= nbsp; &nbs= p; Fisherperson B
Fisherperson A		1	2	3
1	10 &nbs= p; 10	9 &nbs= p; 15	8 18
2	15 &nbs= p; 9	14 &nbs= p; 14	10 16
3	18 &nbs= p; 8	16 &nbs= p; 10	13 13

a) What = is the Nash equilibrium outcome of this game if each fisherperson plays best respo= nse to the other?

b) Is th= e Nash equilibrium result the socially optimal result? Why or why not.

c) What = types of policies are commonly proposed to deal with the tragedy of the commons?

d) What = is the “tragedy” in this tragedy of the commons?

8) Pover= ty traps. (3 points)

a) Expla= in the “stages of progress” method Krishna used to define poverty in the article in the reader.

b) Are Krishna’s poverty transition matrix findings suggesting that concerns about “churning”, that is where individual households move acro= ss the poverty threshold in offsetting ways so that net poverty remains roughly constant, are not warranted in his study area?

c) What = did Krishna find with regard to the link between escapi= ng poverty and the informal sector?

9) Educa= tion (3 points).

Statement	Circle whether the statement is true or false
Evidence indicates that public expenditure per stude= nt in Africa is allocated to the educational level with= the highest social rate of return.	True &nbs= p; False
Evidence suggests the education gender gap has decre= ased worldwide since the 1970s.	True &nbs= p; False
Evidence on spending patterns of public resources on education categorized by occupational status of the family indicate that education is a vehicle for promoting greater equality.	True &nbs= p; False
Evidence suggests that the education component of th= e HDI and the income component of the HDI are positively correlated.	True &nbs= p; False
If education is used as a “signaling device= 221;, this is a good indicator that public investments in education are efficie= ntly allocated across primary, secondary, and tertiary education.	True &nbs= p; False
An education Gini coefficient summarizes information= about the relative distribution of education in a population.	True &nbs= p; False

10) Defi= ne and contrast (3 points).

a. Income poverty and asset poverty.

b. Transitory poverty and chronic poverty.

c. Ex Ante risk management strategies and ex post risk coping strategies with regard to income diversification strategies at the household level.

d. Urban giantism with first city bi= as.

11) Envi= ronment (1 point)

a. Describe the idea behind “land sparing” agricultu= ral technology, and discuss why it may have an unintended non “land sparing” impact overall.

b. Why might increased access to credit lead to poverty reduction and environmental benefits for poor rural farmers?

Extra Credit: <= /span>(1 point, no partial credit)

Describe how common property systems can be viewed as = risk management systems, and also discuss how land tenure programs in the presen= ce of weak states can reduce tenure security.