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Econ 333 > Exam 1 > Flashcards

Exam 1 Flashcards

1
Q

why are countries poor

A

there is no one reason why some countries are poor

-poverty is a very complex issue

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2
Q

How many children die uneccesarily

A

every hour more than 1000 children die unecessarily

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3
Q

what couses most childhood deaths

A
  1. Dysentery ( caused by bacterial, pasasitic, or protozoan infection
  2. ) pneumonia
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4
Q

what happens once children become affected by dysentry or pneumonia

A

they cannot process nutrients leaving them culnerable to other infections

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5
Q

what is GDP

A

GDP is is market value of all goods and services produced within a territory or country

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6
Q

what does GDP stand for

A

gross domestic products

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7
Q

what is GDP per capita

A

income per person

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8
Q

how do you solve for GDP per capital

A

take your total GDP and divide it by your population

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9
Q

what tool can be used to solve for GDP

A
  1. Market exchange rate

2. PPP ( purchasing power parity)

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10
Q

What is PPP

A

purchasing power parity adjust for the difference in purchasing power between say the US and a poorer country
ex. usually a dollar has more purchasing power in a poor countri. US buy one. Mexico buy three

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11
Q

what is GDP usually expressed at

A

GDP is usually expressed in US Dollars

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12
Q

what can the market exchang rate be used for ?

A

to convert foreig currency into US dollars

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13
Q

what is the downside of using the market exchange rate to solve for GDP

A

one rate is being applied to everthing as a hole.

-if you dont pick the correct rate then it is not accurate

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14
Q

how do you caculate another countries GDP in US Dollars using the market exchange rate

A
  1. divide the sales price for both countries
  2. this means the ex 35 rupees equals one dollar
  3. take total GDP of the country and divide by Rate
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15
Q

how do you calculate PPP adjusted GDP

A
  1. find the foreign quantities produced
  2. ) multiply quantities by US Prices
  3. ) add up the numbers
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16
Q

who makes us the mojority of the worlds riches 1%

A

the united states

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17
Q

How do we distinguish between developed countries

A
  • the world bank scheme

* ranks the countries on GDP per capita

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18
Q

describe the different ranks of the world bank scheme

A
  • low income comuntries
  • lower middle income countries
  • upper middle income countries
  • rich countries ( organizations for economic cooperational development)
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19
Q

after what amount of money per year does it not increase happiness significantly

A

60,000

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20
Q

what is HDI

A

answers the questions of how many people are healthy, reasonably wealty and wise ( education )

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21
Q

whatdoes HDI take the weighted avrage of

A
  1. Health
  2. Life expectancy
  3. Education
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22
Q

what has happened to the number of people living in absolute poverty

A

has remained the same

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23
Q

what has happened to the number of people living in poverty

A
  • it has gone down significantly
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24
Q

what is the history of economic growth

A
  • economic growth is a recent phenomenon
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25
Q

which is more popular to measure well being?

A
  • GDP at PPP i more popular

- GDP data more frequently available

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26
Q

when did growth really begin to take place

A

until about the 1750’s 1800

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27
Q

why did europe growth so fast from 1750-1800 and after

A

the industrial revolution

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28
Q

what was the pre-galileo world

A
  • aristotle belived that the earth was the center of the universe
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29
Q

what were the ideas of aristotle

A
  • the earth did not move. celestial bodies circled the earth
  • the earth could no progress or move -
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30
Q

when did the idea of progress start taking place

A

in the post galileo world

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31
Q

is it probably not possible for a country to what?

A

experience economic development without economic growth

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32
Q

how many people out of ten have electricity in their homes

A

8

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33
Q

what did plato belive

A

he claimed that history was always being repeted

  • Had a 36000 year cycle
  • ex. 36000 years of glory , 36000 years of decline
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34
Q

what was the idea of nitzche

A
  • eternal recurence
  • if time is infinate that everything wwas could happen has already happened so we must eternally be repeating everything in our livesm
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35
Q

what idea exist in most religions

A

the idea of cycel exist in most religions

-there is no concept of progress ex. christianity, budhism

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36
Q

what did st. augustine propose

A
  • he proposed the doctrine of original sin ( because your original parents sinned, everyone is a sinner)
  • all religions agree that the apocolipse would end the world
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37
Q

what were the ideas of david hume

A

claimed that like humans all civilizations hay youth, maturity and old age

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38
Q

did charles darwin belive in progress

A

-charles talked about evolution not progress

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39
Q

what are the complex roots of economic development

A
  1. Geography
  2. evolution
  3. history
  4. crop patterns
  5. agriculture
  6. germs
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40
Q

what is the most important this for economies to have in order to prosper

A
  • internation trade
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41
Q

what is an important factor when looking at trade

A

transportation cost

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42
Q

which form of transportation is the cheapest

A
  • ocean/ river transportation
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43
Q

what are hydraulic civilizations

A

civilizations close to waterways did better

-better access to cheaper trade thus they prospered

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44
Q

describe the statistics behind being close to water and and the GDP

A
  • 17 % of total land mass is within 60 miles of oceans/ waterways
  • 50 percent of the people living on this land hold over 67 percent of the worlds GDp
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45
Q

where aremost economic growth centers located

A
  • most economic growth centers have been close to rivers and oceans
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46
Q

why is sub saharan africa so poor

A

lack of access to river or oceans

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47
Q

what is the defference between europe and Africa

A
  • Africa- only 21 %has access to the ocean

- europe which is 1/8 the size of Africa has 50% more coastline

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48
Q

what is transportation cost also dependent on

A
  • dependent on proximity to major economic centers
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49
Q

what is growth clustering

A

occurs when one area becomes economically

-africa has very few clusters

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50
Q

does africa have alot of rivers?

A

africa has very few rivers and it is a very large continent

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51
Q

why did jared diamond take a look at 13,000 years of human history

A
  • because that was when the ice age ended
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52
Q

what does gared diamond say is the reason why eurasia develop rather than africa

A

-geography

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53
Q

what is the evolution of civilizations according to jared

A

-domesticatable animals & crops –> agriculture –> cities and civilizations –> guns

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54
Q

what did agriculture and domesticatable animals develop

A

germs

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55
Q

what are the five major domesticatable animals in the world today

A
  1. sheap
  2. goats
  3. cows
  4. pigs
  5. horses
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56
Q

what the the total number of domesticatable animals that we have today

A

14

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57
Q

were the ancestors of domesticated animals spread eveny

A

no

-none of the ancestors was indegenous to sub-saharan Africa

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58
Q

wat did not having domesticated animals do

A

was much harder to develop mass gricultures and form cities and civilizations

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59
Q

what accounts for 41 % of the total calories consumed in the world

A
  1. wheat

2. rice

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60
Q

where is wheat native to

A

the fertile crescent around modern turkey and iraq

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61
Q

where is rice native to

A

china

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62
Q

what happens to agriculture in torrential rain

A
  • torential rain in tropical regions washes away the nutrients from the soil
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63
Q

what happens to agriculture in temperate regions

A

mild frost is temperate regions is better because the water works like a drip system

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64
Q

what led to eurasia in particular to develop agriculture

A
  • the uneven distribution of domesticatabl plants and animals
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65
Q

why did agriculture and other ideas spread faster in eurasia

A

because its major axis is east-west along a similar latitute meaning a similar climate

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66
Q

does having a north- south axis make the spread of ideas faster?

A

-no the north to south axis means different climates so things that thrive in the north might not thrive in the south

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67
Q

where do major infectiour diseases evolve from

A

animals

  • small pox
  • flu
  • tuberculosis
  • malaris
  • lague
  • measels
  • cholera
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68
Q

what main disease killed the people of the new world

A

small pox

69
Q

why did europeans have a more difficult time conquering asia and africa

A

malaria

70
Q

summarize the diamond argument

A
  1. east- west axis
  2. ease of species preading
  3. domesticated plants and animals
  4. food surplus and storage
  5. large stratified societies
  6. technology –> guns , ocean- going ships
71
Q

what is the difference btween italy and pakistan in regards to malaria ecology indice

A

because italy has better health policies

72
Q

where is it easier to eradicate malaria

A

isolated islands

73
Q

where is most of the world poverty

A

around the equator- due to heatness

74
Q

what can have a damagin effect in poor countries

A
  • higher temperates
  • global warming increase gap between between rich and poor
  • slower economic growth
75
Q

what was the effect of the introduction of air conditioning

A
  • it allowed people to continue working even in hot temperatus
  • it is earlier to deal with the coldness ( cheaper to keep warm) that with hotness.
76
Q

what is the relationship of latitude( distance from equator) and and GDP (incope per capita)

A

the further you are away from the equator the wealthier you are

77
Q

what is the relationsihp between latitude and agricultural GDP per worker

A

the further you are away from the quator themore you make in the production of crops

78
Q

what does cleaopatras nose theory argue

A

that chance plays abig role in hostorical outcomes

79
Q

what does Carr ask

A

can such accidents determine history in a complete random fashion or can we predict an underlying force tgat shapes history

80
Q

what did francis fukuyama belive

A
  • francis fokuyama has his great cause which which is the inevitable predominance of liberal democracy and capital
  • ex. the sum of millionsof human wishes if one thing does not bring change then another will
81
Q

which tropical diseases had had the greatst impact on economic growth

A

malaria

82
Q

what is a resource curse

A

in the long run the prescence of natural resources can impede economic growth

83
Q

what was growth accompanied by

A
  1. indistrialization
  2. capitalism
  3. urbanization
  4. individualism
84
Q

what were some characteristics of pangea

A
  • all the continents were originally together

- all countries were similar in terms of low income but then they moved apart

85
Q

what was the originic of economic growth

A

the fertile crescent

86
Q

how long ago did economic growth begin in the fertile crescent

A

250 years ago

87
Q

what happened as income started growing

A
  • industries developed
  • industrial technology developed
  • agrigultural technology developed
  • people move from agricultureto society
  • indistries started hiring people
  • domestic and international trade became sign ificant
  • people noticed that life was changing
  • theories of growth began after growth started
88
Q

what does agriculture need to do

A

Agriculture must create surplus to support
industrial workers. Industrial workers must
depend on food surplus from agriculture.

89
Q

how can you create agricultural surplus

A

Agricultural surplus may be exported. So trade

became a significant factor behind growth.

90
Q

what can idustry do

A

can produce tools to increase surplus

-so a mutual relationship developed

91
Q

what was done with inustrial goods and agricultural surplus

A

Industrial goods and agricultural surplus may also be exported. So trade
became a significant factor behind growth.

92
Q

what started forming as income started growing

A

classical theories of growth

93
Q

describe how trade connects agriculture and industry

A
  • industry muts buy agricultural products to feed the workers working in the industry
  • augricultural workers must demand industrial products to make production worthwhile
  • industry and agriculture must trade goods between sectors
  • thus all three must work toghether to make economic development possible
94
Q

describe the agriculture, trade and industry relationship

A
  • agriculture must ceate surplus to support industrial workers
  • workers must depend on on surplus from agriculture
  • industry can produce toold to increase agricultural surplus
  • -> amutually relationship developed
95
Q

how do you achieve economic development

A

all three, agriculture, industrial and trade must work together to make economic deveopment possible

96
Q

what are the three musketeers of development

A
  1. agriculture
  2. trade
  3. industry
97
Q

what were the three political disticts groups formed to suppor the three sector

A
  1. Physiocrats
  2. mercatalist
  3. Marx
98
Q

what did physiocrats believe

A

they thought that agriculture was the crutial determinant o fgrowth

99
Q

what did mercantilist believe

A

-they thought trade was the primary force behind economic growth

100
Q

what did marx believed

A

-places supremacy on industry

101
Q

what spawned capitalism

A

it was spawned by industry ( marx)

102
Q

what prevented international trade inittially

A

-high transportation cost

103
Q

what happened as transportation cost started going down

A

-it was possible for agriulture and industry to develop in rural and urban places with thrade in between

104
Q

what wa sone of the most important conduit for both agriculture and industry

A

-trade

105
Q

where did economic growth seems to have almost always occured

A

in places close to rivers

106
Q

did international trade existi before ocean shipping

A

-yes the silk route

107
Q

when did international trade really thrive

A

hen alternative shipping points were developed on the sillk route

108
Q

why did europe develop better than poorer countris

A
  • longer coast lines
  • better shipping
  • europe had simultanous agricultural and indutrial revolution
109
Q

where were countried developed along

A

the fertile crescent

110
Q

describe the US shipping and trade

A
  • the erie canal which linked albany to buffalo boosted trade
  • the robert fulton clemont steamboat made shipping much easier
111
Q

what brought properity through trade

A

command over water and steel ( rail lines)

112
Q

what were some of the most important trades interntionally y

A

perume and spice because transportation was relatively cheap

  • . ex. no spoilage
  • easy to carry
113
Q

what one of the earlierst motives for for international trade

A

the spice trades

114
Q

what were the three spices that changed the world

A
  1. nutmeg
  2. mace
  3. cloves
115
Q

what island were the spices collected from

A
  • the maluku islands near papua new guimea
116
Q

what tool changed the world

A

the harrison clock

-shipping beacme easier

117
Q

who was zhng he

A
  • cheng hes explorations made chinese trade possible
118
Q

why didnt china prosper as much as europe if china was so good in land and ocean exploration

A

because china decided to close its borders and become a close economy
- become a near autarky ( self sufficinet)

119
Q

during what centure did china did not presper

A

-during the 18th and 19th centuries

120
Q

what did china ultimately claim for why they were closing its borders (1792)

A
  • china claimed that they were better at everything

- -> because of this they avoided immediate colonization but chinas decline started after 1792

121
Q

when did chinas progress begin

A

in the 1980s once they opened up for trade again

122
Q

how ong did china had to wait to ship goods to the rest of the world

A

600 years

123
Q

what did physiocrats belive was the source for all growth

A

mother nature

124
Q

what did physiocrafts belive the formula for surplus was

A

since input and output units are the same
output-input = surplus
-more surplus = more growth

125
Q

who did physiocraft belive the governemnt should support

A

farmers

  • indutry mearly transformed products it did not create products
  • they though indutry was sterile
126
Q

who was the most facour physiocrat

A

francois quesnay

127
Q

are the physiocrats correct

A

-no at one point engalnd prospered ith only 3% of wealth from agriculture

128
Q

what did mercatilist believe

A

they thought trade, spcifically exports created wealth

129
Q

how did european merchants look at international

trade

A

they looked at international trade as a source of PERSONAL wealth

  • more exportrs equal more gold for the merchants
  • exports are good and imports are bad
130
Q

what is the ultimate claim of mercantilism

A

-trade is a zero-sum game where exporters win and importers loose

131
Q

what is the dowside to export surplus

A

-more gold circulates inside the exporting country –> prises rises –> exports fall –> export surplus falls

132
Q

who was one of the most influencial economist of industry

A

marx

133
Q

what did marx believe

A

be though capitalim is immensly better than feaudalism

134
Q

according to mark what was capitalism synonym to

A

industrialization

135
Q

what did hunting and gathering societies turned to as described by marx

A

feaudal societies

136
Q

describe the primitive communism to feaudalism

A
  • hunting and gathering societies collapsed as agriculture became more important. land ownership became important
  • land ownership led to exploitative feaudalism
    -under feaudalism land owners became important
  • Feudalism created a rent-seeking system that
    did not encourage free entry and free exit.
137
Q

introduction of capitalism

A
    • cities and industries started developing
  • capitalist wanted workers
  • landlords had to let their workers move to factoris
  • conflict between feadalism and capitalim
  • capitalist made profit by increasing output
138
Q

what is the difference between faudalism and capitalist

A
  • feaudalism - rnt seeking society

- capitalism - profit- seaking society

139
Q

what did marx think would eventually happen to capitalism

A

-it would evnetually collapse because there would be severe demand shortages ( recessions) and capitalism would give rise to socialism and communism

140
Q

what is marxian long view of history

A
  1. hunting and gathering society
  2. feaudalism
  3. capitalism
  4. socialism
  5. communism
141
Q

what is the prime mover in the marxian growth model

A

labor

142
Q

what does labor add in the marxian model

A

value

143
Q

what does the variable of V stand for the marz analytical framework

A
  • value of labor power
  • variable
  • time needed to sutain worker plus time to make product
144
Q

what does the variable of C stand for the marz analytical framework

A
  • C is a constant since according to marx machinery mearly transferred it value to output
145
Q

what does the variable of W stand for in the marz analytical framework

A
  • the total value of production
146
Q

what does the variable of S stand for the marz analytical framework

A
  • surplus value

- teh difference between what the worker is paid and the number of hours the worker actually works

147
Q

what creates the value of surplus

A

-it is created by labor power

148
Q

what is the value of any production

A

W=C + V + S

149
Q

wht is the formula for the net value ofproduction

A

Y=V+S

150
Q

according to hodgson what is the profit rate if t is the turnover rate

A

S/( K + T(C+V)

151
Q

When would a company achieve maximum profit

A

when V is close to zero ( worker gets paid very little) and turnover rate is really high

152
Q

what is the formula for maximum profit

A

S/K = Y/K

153
Q

according to marx what would happen as capitalism progresses

A

capitalism will increase capital and intensive production will happen and Y/K will cal

154
Q

what do modern economy currently use instead of the max labor theory of value

A

-marshallian marginalist principles

155
Q

what is one of the fundamental ways in which people behave under capilasim

A

only economic means, not feaudal violence was used to achieve ones goals

156
Q

what was smiths theory of growth

A

smith invisible hand of the market created prosperity

157
Q

what was smiths main idea

A

productive labor creates value

158
Q

described adam smiths theory of growth

A
  • productive labor can specialize and increase productivity
  • productio - broken down into mutiple processes ( specialization )
  • specialization and division of labor increases efficiency
159
Q

what are the two conditions for smith theory of growth

A
  • one must have a large enough market
  • large countries with large internal markets will perform well
  • small coutnries with with access to international markets will also perform well
160
Q

what was the prime mover in smiths model

A

-technology which depended on market size

161
Q

what did smith divide labor into

A

productive ( manufacutring, labor, produced something) and unproductive labor ( not tangible such as singing)

162
Q

describe the schematic model of growth for smith

A
  1. labor ( productive and unproductive)
  2. division of labor
  3. better technology
  4. higher GDP
163
Q

Compare marx and smith

A

for marx: maximum profit was Y/K

For Smith: profit determined by extent of market Y/K will rise as market expands and technology becomes better

164
Q

what is smiths theory of moral sentiments

A

it shows that our moral ideas and actions are a product of our very nature as social creatures

165
Q

what are some theories of why feaudalism collapsed - mcclelland

A

need for achievement
N-ach
-the degree to which someone is motivated to set and reach goals. People with a high n Ach are usually driven to succeed for internal reasons such as personal satisfaction rather than by external pressures.
ex- jews and saving

166
Q

according to max webber what was capitalism defined as

A

Capitalism is defined
by an orientation toward economic activity
characterized by rational systematic pursuit of
economic gain by purely economic means.”

167
Q

Why did max believe that protestants become good capitalist

A

people of teching of their pastir john valacin

168
Q

what did robert barro and rachel McCleary find out

A
  • economic growth correspons positively to the extend of believes but negatively to church attendance.
  • believeing rathre than belonging

Econ 333 (2 decks)

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