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    Answer Set 1d

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    Anonymous Rp2aTPIVZ9
    This document contains sample questions and answers for chapters 1-4 of a development economics textbook. For chapter 1, the questions cover definitions of development economics, how it differs from traditional economics, obstacles to development, and the role of women in development. Chapter 2 questions focus on poverty traps, challenges faced by developing countries, differences between economies, and indicators like HDI and GDP. Chapter 3 examines models of economic growth including Rostow's stages, Harrod-Domar, Lewis, and conclusions that can be drawn from investment rates. Chapter 4 introduces endogenous growth theory, coordination failures, big push models, and implications of O-ring theory.

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    Answer Set 1d

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    Anonymous Rp2aTPIVZ9
    2K views6 pages
    This document contains sample questions and answers for chapters 1-4 of a development economics textbook. For chapter 1, the questions cover definitions of development economics, how it differs from traditional economics, obstacles to development, and the role of women in development. Chapter 2 questions focus on poverty traps, challenges faced by developing countries, differences between economies, and indicators like HDI and GDP. Chapter 3 examines models of economic growth including Rostow's stages, Harrod-Domar, Lewis, and conclusions that can be drawn from investment rates. Chapter 4 introduces endogenous growth theory, coordination failures, big push models, and implications of O-ring theory.

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    This document contains sample questions and answers for chapters 1-4 of a development economics textbook. For chapter 1, the questions cover definitions of development economics, how it differs from traditional economics, obstacles to development, and the role of women in development. Chapter 2 questions focus on poverty traps, challenges faced by developing countries, differences between economies, and indicators like HDI and GDP. Chapter 3 examines models of economic growth including Rostow's stages, Harrod-Domar, Lewis, and conclusions that can be drawn from investment rates. Chapter 4 introduces endogenous growth theory, coordination failures, big push models, and implications of O-ring theory.

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    Download as doc, pdf, or txt
    2K views6 pages

    Answer Set 1d

    Uploaded by

    Anonymous Rp2aTPIVZ9
    This document contains sample questions and answers for chapters 1-4 of a development economics textbook. For chapter 1, the questions cover definitions of development economics, how it differs from traditional economics, obstacles to development, and the role of women in development. Chapter 2 questions focus on poverty traps, challenges faced by developing countries, differences between economies, and indicators like HDI and GDP. Chapter 3 examines models of economic growth including Rostow's stages, Harrod-Domar, Lewis, and conclusions that can be drawn from investment rates. Chapter 4 introduces endogenous growth theory, coordination failures, big push models, and implications of O-ring theory.

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    of 6

    Chapter 1

    Short Answer
    1. Provideadefinitionofdevelopmenteconomics.Justifyyourchoicecarefully.
    Answer: SeethesectioninChapter1entitled,TheNatureofDevelopmentEconomics,
    onPages910forsomeideasabouthowyoumightanswerthisquestion.You
    shouldinsomewaysaythatdevelopmenteconomicsismorethanjustgrowthin
    GDP.
    2. Inwhatwayisdevelopmenteconomicsgreaterinscopethantraditionaleconomics?
    Answer: Developmenteconomicsmustencompassthestudyofinstitutional,political,and
    socialaswellaseconomicmechanismsformodernizinganeconomywhile
    eliminatingabsolutepovertyandtransformingstatesofmindaswellasphysical
    conditions.Moredetailsfoundinthechapter.
    3.

    Whatdoyouthinkarethemostseriousobstaclestofurtherprogressinthedeveloping
    world?
    Answer: Themainpointhereistoensurethatyouarethinkingcarefullyabouttheissues
    raisedinthetext.YoumayalsowishtodrawfromthecriticalquestionsonPages
    1012.

    4.

    Whyarewomenoftenreferredtoasplayingacentralroleineconomicdevelopment?
    Answer: Ananswershouldincludehowwomencaninfluencewhetherornotthenext
    generationwillbeimpoverishedthroughtheirroleofchildrearingbasedonthe
    resourcestheybringtothistaskandthevaluestheypasstotheirchildren.Another
    keypointthatshouldbementionedisthatempirically,womentendtoallocatea
    higherpercentageoftheincomeundertheirowncontroltothefamilyand
    childrenthanmen.

    Multiple Choice
    1.C

    2.D

    Chapter 2

    4.D

    5.C

    6.D

    7.D

    8.B

    9.C

    10.A

    Sample Questions
    Short Answer
    1. Explainhowlowlevelsoflivingcanturnintoaviciouscycleindevelopingcountries.
    Answer: Seethesectiononlowlevelsoflivinginthechapter.
    2.

    Carefullyexplainsomeofthesimilarproblemsfacedbyotherwisediversecountriesin
    Africa,Asia,andLatinAmerica.
    Answer: Thiscallsforyoutosummarizesomeofthemainpointslistedinpage40.

    3.

    Whataresomeofthemainwaysinwhichtheeconomiesofdevelopingcountriesdifferfrom
    oneanother?
    Answer: Seethediscussioninpage5671;Diversitywithincommonality.

    4. Explainwhypurchasingpowerparitymeasuresofincomelevelstendtoshowasmaller
    differencebetweenpoorandrichcountries.
    Answer: PPPmeasuresshowthenumberofunitsofdevelopingcountrycurrencyrequired
    topurchaseabasketofgoodsandservicesinthedevelopingcountrymarketthat
    costsonedollarintheU.S.Pricesformostservicestendtobemuchcheaperin
    developingcountriesthanintheU.S.
    5.WhatarethethreemainindicatorsthatmakeuptheHumanDevelopmentIndex?
    Answer: Lifeexpectancy,educationalattainment,GDPpercapitameasuredinPPPterms.
    6. Whatarethethreemajorcomponentsofeconomicgrowth?
    Answer: Capitalaccumulation,laborforcegrowth,andtechnologicalprogress.

    7. Explainthelingeringeffectsofcolonialismandhowitisstillplayingaroleinhindering
    economicdevelopmentinthedevelopingworld.
    Answer: Answersshouldbebasedonthepointscoveredinthesectiononthecolonial
    impactaswellasinlecture.
    12. The2003HumanDevelopmentReportreportedthattheHDIofBotswanawas0.614(andits
    rankwas125)andthatofthePhilippineswas0.751(anditsrankwas85).Botswanasper
    capitaincome(inPPPdollars)was7,820andthatofthePhilippineswas3,840.Comment
    andexplain.
    Answer: Studentsshoulddiscussthedifferencebetweeneconomicgrowth(percapita
    income)andeconomicdevelopmentbydiscussingthecomponentsoftheHDI.

    Multiple Choice
    1.B2.D3.C4.A5.C6.A7.D8.D9.D10.D11.C12.D13.C

    Chapter 3

    Sample Questions
    Short Answer

    1.

    DescribeoneimportantcriticismofRostowsstagesofeconomicgrowththeory.
    Answer: Thestagesareonlynecessaryandnotsufficientconditions,savingsistoo
    aggregateameasure,thetheorydoesnottakeintoaccounttheconstraintsofthe
    internationaleconomicorder,andtherearecounterexamplessuchasArgentina.

    2.

    Assumeaclosedeconomy,perfectlyelasticlaborsupply,andlineartechnology.Supposethe
    incrementalcapitaloutputratio(ICOR)is3,thedepreciationrateis3%,andthegross
    savingsrateis10%.UsetheHarrodDomargrowthequationtodeterminetherateofgrowth.
    Whatwouldthegrosssavingsratehavetobetoachieve5%growth?Assumingaperfectly
    elasticlaborsupply,stateonecriticismofthismodelfromanexogenousgrowththeory
    viewpointandanothercriticismofthismodelfromanendogenousgrowththeoryviewpoint.
    Answer: .Answer:growthrateof0.003,thatis0.3%,and0.24,or24%savingsrate.
    Exogenous:doesnotallowfactorsubstitution;endogenous:doesnotaddress
    sourcesofproductivitygrowth,orthesavingsdecision.

    3.

    WhatarethekeyassumptionsoftheLewismodelthatgiverisetoitsconclusions?How
    wouldthetheorysconclusionsdifferiftheseassumptionsdonothold?
    Answer: Theanswershouldincludetheexistenceofsurpluslaborintheruralsectorthat
    guaranteesaninfinitelyelasticlaborsupplyinindustryuntilthesurplusis
    exhaustedandapropensity
    tosavebyindustrialistsequaltoone.Thelackofruralsurpluslabor(andinfinite
    laborsupply)wouldimplythatwhenindustrialistsreinvesttheirprofitsthereisno
    guaranteethattheirsurplusincreases.Alowmarginalpropensitytosaveby
    industrialistsputsabreakonthelabortransferprocess.

    4.

    Duringthepastdecade,Indiahasinvestedabout22%ofitsGDPwhileChinasinvestment
    ratehasbeendoublethatofIndias.Indiasannualgrowthratehasbeenabout6%whilethat
    ofChinahasbeenabout9%.Whatconclusionscanyoudraw?
    Answer: Studentsareaskedtorelateinvestmentratestotherateofeconomicgrowth
    throughtheHarrodDomarmodel.ThestudentsshouldcalculatetheICORforthe
    twocountriesandnotethatIndiasICOR(about3.67)islowerthanChinas
    (about5).

    5.UsethehandoutonNeoclassicalgrowthmodeltoshowthatwithouttechnologicalprogress
    aneconomywillalwaysconvergetoitssteadystatewherepercapitaoutputandincome
    remainsconstant.

    Multiple Choice
    1.D2.A3.B4.D5.B6.C7.A8.A9.A10.B11.C12.B13.B14.D15.C16.D
    17.D18.B19D

    Chapter 4

    Sample Questions
    Short Answer
    1. Whatthreefactorsdistinguishmodelsofendogenousgrowthfromtheirneoclassical
    counterparts?
    Answer: Thereareincreasingreturnstocapitalinvestment(asopposedtodecreasing),
    thereareincreasingreturnstoscale(asopposedtoconstant),andexternality
    effectsareincluded.
    2. Explainwhatismeantbythetermcoordinationfailureandprovideanexample.
    Answer: Thisisastateofaffairsinwhichagentsareunabletocoordinatetheirefforts,and
    henceendupinanequilibriumthatleavesthemworseoffthantheywouldbeif
    theywereabletocoordinate.Thereareseveralexamplesofferedinthetext,orthe
    studentsmaycomeupwiththeirown.
    3. ShowinadiagramanScurveanda45degreeline.Areallthreepointsofintersectionstable
    equilibriumpoints?Explain.
    Answer: Explainedinthetext.Figure4.1

    4. Explainhowthegovernmentcanhelptheeconomyavoidacoordinationfailure.
    Answer: Discussedinthechapter.
    5. Isacoordinationfailureatypeofmarketfailure?Explain.
    Answer: Yes,becauseanequilibriumcanbereachedthatisnotthetruesocialequilibrium.
    6. ExplainthebasicideabehindtheBigPushmodel?
    Answer: BrieflyexplaintheideabehindFigure4.2.
    7. HowcantheOringtheoryhelpexplaintheexistenceofalowlevelequilibriumthatan
    economymayfinditselfin?
    Answer: ExplainedonPage18283:ImplicationsofOringtheory.

    (Multiple Choice
    1.D2.A3.D4.C5.D6.A7.B

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