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ECS 3013 – International Economic Development – Spring 2013Review for Exam 2 – Chapters 5 – 7*The exam will consist of essay/short answer questions, graphing, and matching (terms and concepts to definitions)Cp 5 – Poverty, Inequality, and Development:1.The following income distribution data are for Brazil:QuintilePercent ShareLowest 20%3.0%Second quintile6.9%Third quintile11.8%Fourth quintile19.6%Highest 20%58.7%Highest 10%43.0%a.Carefully graph the Lorenz curve, labeling the axes.b.Explain how to find the Gini coefficient, graphically.c.Brazil’s national income is $300Billion. What is the approximate dollar income of the bottom 20%? Bottom 40%?d.Brazil’s population is approximately 150 million. Suppose that each household makes the average income for its quintile. What is the level of poverty if the poverty line is $400 per capita?e.Suppose one percent of national income were transferred from the richest 20% of households to the poorest 20% of households. Show the effect on relative inequality.f.Under the same transfer, what is the effect on poverty?2.Consider the following distribution of income in a 12-person economy, with the modern urban wage 3, the traditional rural wage 1: (1,1,1,1,1,1,3,3,3,3,3,3). The wage for the poverty line 1.25. Calculate GNI for all sectors of the economy combined. Calculate the % of income for the bottom 50% and top 50% of income earners in this economy. Carefully graph the Lorenz curve labeling it as (1), and be sure to label the axes. Next, suppose that rural incomes are raised to 1.5 through expanded agricultural exports (traditional sector enrichment). Re-calculate GNI for all sectors of the economy combined. Calculate the % of income for the bottom 50% and top 50% of income earners in this economy. Carefully graph this Lorenz curve labeling it as (2). What