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Brown EC 151 - Development Economics

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Economics 151Development EconomicsEconomics 151Development EconomicsSample Exam QuestionsCircle one answer only for each multiple choice question. Each question is worth 2½ points.1. By the World Bank’s classification system, Malaysia, Mexico and Brazil area. low-income countriesb. upper-middle-income countriesc. industrial economiesd. underdeveloped countries2. In 1997, the World Bank found that the fraction of the world’s population living in low and lower-middle income countries—that is, countries with per capita incomes of$1230 or less—was approximatelya. 25%b. 40%c. 55%d. 75%3. Overall, the growth rate of average incomes in less developed countries between 1960and 1995a. was approximately zerob. exceeded that of high income countriesc. exceeded that of Britain during the industrial revolutiond. was approximately 3.0% per year4. Most Latin American countries achieved independencea. shortly after World War IIb. in the 1960sc. around the time of World War Id. in the early nineteenth century15. Many countries that became independent after World War II found that the legacy of colonialism hindered their economic development. According to the textbook, the listof hindrances includeda. artificial political boundaries that covered diverse ethnic groups with little in commonb. inadequate access to higher education and training for nationals under the colonialadministrationc. control of domestic commerce by foreign minority groups which had been brought in by the colonial powerd. all of the above6. At the time of independence, there were already hundreds of thousands of university graduates in ____, but hardly any at all in ____.a. India, Congob. India, South Koreac. Congo, South Koread. South Korea, India7. Which of the following is not viewed by the text as a major political obstacle to development?a. growth oriented policies may damage the short-term interests of influential groupsb. civil warc. corruptiond. departing from strict laissez faire principles8. In the Harrod-Domar equation g = s/v, v is defined asa. the value of the country’s capital stockb. the ratio of the country’s capital stock to its outputc. the change in the country’s capital stockd. none of the above9. A sources of growth equation derived from the neoclassical production function Y = f(K,L,R,A) is gY = a + wKgK + wLgL + wRgR. In this equation, gK refers to the growth rate of the capital stock and wK is a. the average wage of capital ownersb. a weight on capital typically set at the rate of interestc. a weight on capital typically set to 1/3 so that wK + wL + wR = 1.d. a weight on capital typically set equal to capital’s share in national income210. Suppose that in the equation above gY = .04, that gK, gL, and gR are all = .03, and wK + wL + wR = 1. What does this imply?a. national income must be growing by 7% a yearb. national income must be growing by 1% a yearc. productivity must be growing by 1% a yeard. productivity must be growing by 7% a year11. In the three-part diagram of the labor-surplus model in Figure 3-5, the marginal product of labor in the agricultural sector can be measured in the lower panel (A) bya. the height the solid curve at a given quantity of labor b. the angle of a ray from the zero point to the solid curve at a given quantity of laborc. the length on the (bottom) horizontal axis from the zero point to the quantity of labor in questiond. the (negative of the) slope of the solid curve at a given quantity of labor12. If the number of agricultural workers is i, a commercial (i.e., profit maximizing) farmer would find it profitable to hire a laborera. as long as the wage is less than the distance t’h (shown in the middle panel)b. as long as the wage is less than the distance t’’k (shown in the top panel)c. only if the laborer will work for freed. only under a share-cropping arrangement13. World Bank data show that in 1995, the poorest 20% of households accounted for 7.5% of household income in Niger, the next 20% of households accounted for 11.8%of income, the middle 20% accounted for 15.5% of income, the second richest 20% accounted for 21.1% of income, and the top 20% accounted for 44.1% of income. What was the cumulative income share of the bottom 60% of households in Niger?a. 15.5%b. 34.8%c. 48.1%d. 65.2%14. Figures a, b, and c represent Lorenz curves for the distribution of income in various countries. Which curve corresponds most closely to the data given for Niger in the question above?a. Figure ab. Figure bc. Figure cFigure a 1003cumulative 80percentof income 6040200 0 20 40 60 80 100 cumulative percent of householdsFigure b 100cumulative 80percentof income 6040200 0 20 40 60 80 100 cumulative percent of householdsFigure c 100cumulative 80percentof income 6040200 0 20 40 60 80 100 cumulative percent of households15. The Gini coefficient of income distribution in Niger was roughly:a. .224b. .36c. .49d. .6116. The conjecture that inequality first increases with development, then decreases with further development (known as the “inverted U hypothesis”) has beena. strongly supported by most studiesb. supported mainly by cross-section, not time-series studiesc. supported mainly by time-series, not cross-section studiesd. generally repudiated by empirical studies17. Which of the following is not an element of the redistribution-with-growth policy approach?a. minimum wage legislationb. land reformc. progressive taxationd. increased access to education18. Each of the following is listed by the textbook as one of the foundations for a well-functioning market economy, except:a. stabilize macroeconomic conditionsb. establish a stock marketc. dismantle administrative controlsd. let relative prices reflect scarcity values19. According to the input-output table of Table 3-1 (refer to textbook), the value of services in dollars used directly to produce each dollar of manufactured consumer goods is _ _ _ _20. The total revenue from operating a fishery is graphed against the level of fishing effort as the curve TR shown in the figure below. The total cost of fishing as a function of the effort expended is graphed as the line TC. Maximum net revenue, 5attained at point ___, is/is not expected to result if the industry consists of large numbers of unregulated fishermen each pursuing maximum income without coordination with the others.a. E*, isb. E2, is notc. E1,


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Brown EC 151 - Development Economics

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