Practice Quiz 2 PAI 730-4 Economics of Development
20 points (each question is worth the number of points in parentheses)
1) Poverty measures. Match the following indices to the description: a measure of the extent of absolute income poverty; a measure that obeys the property of distributional sensitivity to income; the total amount of income necessary to eradicate absolute poverty in a given population; a measure composed of indices of depravations. (2 points)
c. UNDP’s HPI ___________________________________
2) Inequality measures. (3 points)
a. Draw a Lorenz curve representing “moderate” inequality, clearly defining the Y-axis and the X-axis. Also draw a line representing perfect equality.
b. Draw a Lorenz curve that contrasts the situation in (a) with a situation of “severe” inequality.
c. How is the Gini coefficient related to the Lorenz curve?
d. Does an increasing Gini coefficient imply greater or lower inequality? Why?
e. Is the Gini coefficient only used for measuring inequality of income? Why or why not.
f. Describe one other measure of inequality described in class.
3) Population. (2 points)
a. What is meant by the “hidden momentum of population growth”, and how does it relate to the child dependent ratio?
b. Describe the stages of the demographic transition using a graph. Clearly label all axes and curves.
4) Human Capital. (2 points)
a. Contrast views of improved health and education as means to facilitate development through increased economic growth and views of improved health and education as goals of development.
a. Are international measures of health and education showing convergence or divergence for the most part? Justify your answer using specific examples of measures.
5) Education (3 points)
a. Are low rates of primary school enrollment explained by negative private expected rates of return to primary education in developing countries? Why or why not.
b. Describe how the concept of opportunity cost is involved in defining the private rate of return to secondary education in developing countries.
c. As a general statement, are current educational budgets in developing countries allocated optimally from a social perspective among primary, secondary, and tertiary levels of education? Why or why not.
d. Does the Gini coefficient of inequality in educational attainment tend to increase or decrease as average educational levels increase?
e. Does the evidence suggest the gender bias in education is highest at the primary, secondary, or tertiary level?
f. Does the evidence suggest that current patterns of allocation of public resources to education among different socioeconomic groups will lead to increased or decreased income inequality over time?
6) Agriculture. (2 points)
a. Is world food production per capita increasing or decreasing?
b. Does agriculture in the developing world account for a larger share of total GNP or total labor force employment?
c. How are observed patterns of cash value of output per farmer in different geographical areas related to the concept of a productivity gap in agriculture?
d. Does your answer for ( c) support the argument that research and development oriented toward developed world agriculture will bring about structural change in developing world agriculture if extension services are strengthened? Why or why not.
7) Environmental issues. (2 points)
a. Describe the logic behind Green / Environmental accounting as it relates to adjusted net saving.
b. Verbally describe the argument behind the environmental Kuznet’s curve. Note specifically whether this argument supports or contradicts the view that income growth will address environmental concerns.
c. Provide one example of a measure for which this holds and one counter example of a measure for which it does not hold.
8) Rural Urban Migration. (2 points)
a. Describe the concepts of “urban giantism” and “first city bias”.
b. Describe why the Todaro model of rural-urban migration implies that urban job creation can lead to increased urban unemployment.
c. What is the distinction between actual and expected urban-rural real wage differentials?
9) Informal sector. (2 points)
a. Describe two benefits of informal sector production in a developing country economy.
b. Describe two drawbacks of informal sector production in a developing country economy.
10) Demand for children models. [extra practice question]
a. Briefly describe the logical foundation for a demand for children model.
b. Describe two ways to reduce population growth that are derived from the demand for children model.
c. Does the demand for children model imply that family planning programs are ultimately futile?
11) Population. [ extra practice question]
a. Does available evidence suggest that high population growth rates lead to decreased income per capita?
b. Is the world population growth rate over the past decade the highest rate ever recorded in human history?
c. Describe the “missing women mystery”.