Sections A accounts for 30% of the marks Section B accounts for 70% of the marks Answers for both sections should be written in the same answer book

Transcription

1 UNIVERSITY OF EAST ANGLIA School for International Development Main Series UG Examination INTRODUCTION TO ECONOMICS OF DEVELOPMENT DEV-4003B Time allowed: 2 hours Answer ALL Questions Sections A accounts for 30% of the marks Section B accounts for 70% of the marks Answers for both sections should be written in the same answer book Notes or calculators are not permitted in this examination Do not turn the page over until you are told to do so by the Invigilator DEV-4003B Module Contact: Dr Paul Clist, DEV Copyright of the University of East Anglia Version 1

2 Page 2 SECTION A (30%) There are 15 multiple-choice questions in this section: choose the best answer for each question. All questions are compulsory. All questions receive equal weight. Write all answers in your answer book in the form e.g. 16 e, 17 f etc. 1. In The Economic Consequences of The Peace John Maynard Keynes maintains that: a. The conditions imposed on Germany after World War I were too lenient and would have given Germany the chance to rearm b. The conditions imposed on Germany after World War I were too severe and would have triggered German resentment c. Peace is the most favourable context for investments and growth d. War is the most favourable context for investments and growth 2. Differently from the relative Gini index, the absolute Gini index: a. fails to consider the relativity of prices across countries b. measures inequality between rural and urban populations c. is a measure of absolute poverty d. takes into account the absolute gap among individuals 3. Which of the following poverty indices is built upon a curve (i.e. nonlinear) individual poverty function? a. Squared Poverty Gap b. Poverty Gap c. Headcount ratio d. none of the above 4. Which of the following is NOT true: a. Asia has the largest urban population b. China has the highest urban growth rates c. The process of economic development goes hand in hand with urbanization. d. Urban population in low and middle income countries now exceeds the urban population in high income rich countries. 5. The following are four examples of measures of health outcomes. Which is the most problematic for analytical purposes? a. Mortality: the number of deaths in a population b. Morbidity: rates of diseases and illnesses in a population c. Life expectancy at birth d. Health-adjusted life expectancy (HALE)

3 Page 3 6. The Harris Todaro model remains important to understand migration. Recent alternative theories complement this with one or more of the following insights a. Migration is a household decision or strategy b. Information asymmetries between migrants and non-migrants of the same household plays an important role c. Relative deprivation may help explain migration d. All of the above 7. Improvement in agricultural productivity is key to economic development. Which of the following are unlikely to matter for productivity increases in agriculture? a. Rural public works. b. Mechanical package of technological modernization c. Extension services d. Biological package of technological modernization 8. Which of the following is an example of the revisionist school of thought about population growth: a. the relation between population and development is relatively predictable across contexts b. market failures are important when explaining population growth c. most governments in developing countries want slower population growth d. all of the above 9. According to the Solow model, the relationship between saving and growth is not linear because of: a. coordination failures between the banking sector and industry. b. business cycles that naturally occur in all economies. c. diminishing returns to capital in the production function. d. fluctuations in macroeconomic policy. 10. The most unsettling conclusion of the Solow model is the conclusion that once the economy reaches its long-run potential level of income, economic growth simply: a. declines, leading to what is referred to as a failed state. b. matches population growth, with no chance for sustained increases in average income. c. causes a rapid inflation, leading to an erosion of gains made during the growth period. d. subsides, as socialism becomes an acceptable form of political economy for the people. TURN OVER

4 Page Which of the following statements is true about new growth theories and the Solow and Harrod-Domar models? a. Both underline the importance of factor accumulation and productivity in the growth process. b. Both treat technology as endogenous. c. Both take externalities into account. d. Both assume increasing returns to scale. 12. An increase in nontradables prices causes the real exchange rate (RER) to: a. appreciate. b. depreciate. c. remain unchanged. d. equal the nominal exchange rate. 13. Economists generally prefer the use of subsidies instead of protective tariffs because: a. subsidies create smaller deadweight losses. b. subsidies can be targeted more carefully. c. the visible cost of subsidies creates an automatic incentive to phase out protection. d. all of the above. 14. The Prebisch-Singer Hypothesis states: a. trade is the main way of lifting countries out of poverty. b. there are winners and losers from trade. c. over time the price of primary commodities falls relative to the price of manufactured goods. d. over time, countries will get better at trading. 15. The idea of aid selectivity is to give aid: a. consistently over time. b. cautiously, with lots of checks and balances. c. to the poorest people in the poorest countries. d. to countries that are poor and relatively well-governed.

5 Page 5 SECTION B (70%) There are 10 questions in this section. All questions are compulsory. All questions receive equal weight. Keep your answers brief and to the point: average answer length is expected to be about a quarter of a page and should not exceed half a page. 16. Explain and graphically represent the Lorenz curve. 17. Explain the concept of market failure and give some example 18. How can behavioural economics help enrich our understanding of economic transactions? 19. Using the relevant graph, explain what is meant by private returns to education and discuss in one sentence the difference between private and social returns to education. 20. Discuss the three reason why birth rates are typically high in low income countries. 21. What is the relationship between capital and growth in endogenous growth models? Explain using a graph. 22. What is the environmental Kuznets curve, and is it accurate? 23. What implications does the theory of comparative advantage have for low-income countries? 24. Imagine a country discovers oil. With the help of graphs, explain the likely effects on the markets for different types of goods and services in the economy. 25. Define the concept of aid fungibility and explain its implications for how countries give aid. END OF PAPER