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Question 1

Absolute poverty

Answer 1

Meeting only bare subsistence essentials of food, clothing, and shelter to maintain minimum levels of living

Question 2

Subsistence economy

Answer 2

Production is mainly for personal consumption and the standard of living yields no more than the basic necessities

Question 3

Development

Answer 3

The process of improving the quality of all human lives

Question 4

Important aspects of development

Answer 4

raising levels of living (sustenance) through relevant economic growth processes, self–esteem, freedom

Question 5

Developing countries

Answer 5

high rates of population growth, low income per capita, and general economic and technological dependence on developed economies

Question 6

Development economies

Answer 6

Concerned with the efficient allocation of existing scarce (or idle) productive resources and with their sustained growth over time\nAlso deals with the economic, social, political, and institutional mechanism, public and private, that are necessary to bring about rapid and large–scale improvements in levels of living

Question 7

MDC\nLDC

Answer 7

More Developed Countries\nLess Developed Countries

Question 8

LDC’s

Answer 8

highly imperfect economies\nconsumers/producers have limited info\nmajor structural changes in both society and economy\nmultiple equilibria possible\ndisequilibrium situations often prevail\nEconomic calculations are dominated by political and social priorities\nOther considerations than utility

Question 9

Value premises

Answer 9

A value judgment reflects personal or class beliefs.. principles, standards, or qualities considered worthwhile or desirable.

Question 10

Social system

Answer 10

the interdependent relationships between economic and noneconomic factors

Question 11

Non–economic variables

Answer 11

Elements of interest to economists in their work but not given monetary value or expressed numerically because of the intangible nature\nE.g. education, health, cultural, political and institutional factors

Question 12

Gross National Income vs. Gross National Product

Answer 12

GNI: Total domestic and foreign output claimed by residents of a country (total value produced within a country (GDP) combined with its income received from other countries)\nGNP: production of any nationals and adding it up

Question 13

Income per Capita

Answer 13

Total GNP of a country divided by total population

Question 14

Trickle down

Answer 14

Rapid gains in overall and per capita GNI growth would “trickle down” to the masses in the forms of jobs and other economic opportunities

Question 15

Development must include:

Answer 15

Acceleration of economic growth, reduction of inequality, and eradication of poverty

Question 16

Sen’s “Functionings”

Answer 16

what a person does (or can do) with the commodities of given characteristics that they come to possess or control

Question 17

5 Sources of disparity between real incomes and actual advantages

Answer 17

Personal heterogeneity\nEnvironmental diversities\nVariations in social climate \nDifferences in relational perspectives \nDistribution within family

Question 18

Sen’s “Capabilities”

Answer 18

freedom that a person has in terms of the choice of functionings

Question 19

7 factors affect national happiness

Answer 19

Family relationships\nFinancial situation\nWork\nCommunity and friends\nHealth\nPersonal freedom\nPersonal values

Question 20

Absolute underdevelopment

Answer 20

when any of food, shelter, health or protection are absent or in critically short supply

Question 21

Indifference curve

Answer 21

graph showing different bundles of goods between which a consumer is indifferent, downward sloping (due to trade off)

Question 22

Purchasing Power Parity (PPP)

Answer 22

The purchasing power of a country’s currency: the number of units of that currency required to purchase the same basket of goods and services that a US dollar would buy in the US

Question 23

Human Development Index

Answer 23

calculates an index based on longevity (life expectancy), education (literacy), and real per capita PPP GDP

Question 24

Rostow stages model

Answer 24

Stage 1 – Traditional society\nStage 2 – Preconditions for take–off\nStage 3 – Take–off\nStage 4 – Drive to maturity\nStage 5 – Age of (high) mass–consumption

Question 25

Harrod Domar Model

Answer 25

Engine of growth: savings and investment\nS=I=?K=k?Y\nsY=k?Y

Question 26

Lewis Structural Change Model

Answer 26

Two sector model\nWhen MPL > 0, inequality will decrease

Question 27

International–Dependence: Neocolonial Dependence Model

Answer 27

Hub and Spoke model\nUnequal power relationship between rich and poor countries

Question 28

International–Dependence: False Paradigm Model

Answer 28

Underdevelopment is a result of good intentions but inappropriate advice from Western “Experts”

Question 29

International–Dependence: Dualistic Development

Answer 29

“Inferior” versus “superior” set of conditions\nno “trickle–down”\nLewis Model assumes it

Question 30

Neoclassical Counter–Revolution

Answer 30

Advocates of ‘free markets’\n‘Underdevelopment’: a result of bad state intervention

Question 31

Solow Growth Model

Answer 31

Adds labour and technology to the H–D Model\nAssumes Constant Return to Scale (CRS): ? Y = F(? K, ? L)

Question 32

Endogenous Growth Theory: The Romer Model

Answer 32

This model can generate Solow model as a special case.. if Beta = 0

Question 33

Size distribution of income

Answer 33

amounts of income received by the rich, poor, and middle–class individuals or families and often is interpreted as a direct measure of welfare\nin terms of income deciles (tenths) or quintiles (fifths)

Question 34

Lorenz curve

Answer 34

Depicts the cumulative distribution of income

Question 35

Head Count Index

Answer 35

Proportion of individuals living under the poverty line: HCI=H/N

Question 36

Poverty Gap

Answer 36

The amount of money needed to bring everyone below the poverty line up to the poverty line

Question 37

Foster–Greer–Thorbecke

Answer 37

Looks at income inequality among the poor

Question 38

Welfare function

Answer 38

W = W(Y,I,P)

Question 39

Dualistic Development

Answer 39

Modern sector enlargement, traditional sector enlargement and Lewis–style modern sector enlargement (good)

Question 40

Poverty and Growth

Answer 40

Poverty alleviation policies need not be bad for growth