2012 mt - Econ 355W cfw Prof Karaivanov cfw Spring 2012...

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Econ 355W { Prof. Karaivanov { Spring 2012 Midterm Examination I. TRUE/FALSE (5 pts each; answer in 5 lines or less; correct answers without justi°cation will receive zero credit) 1. The headcount index does not capture the distance of a particular person’s income to the poverty line. 2. If coordination failure is the reason for a country’s underdevelopment, then continuous, long-term policy measures are needed to make the country grow. 3. Purchasing power parity measures of income levels tend to show smaller di°erences between poor and rich countries than exchange rate measures. 4. There is a strong negative correlation between within-country inequality and GDP per capita. 5. In the ‘big push’ (Rosenstein-Rodan) model there are always two equilibria { one in which all sectors modernize and one in which no sector does. 6. High population growth causes low GDP per capita which justi±es policies aimed at fertility reduction. II. MULTIPLE CHOICE (3 pts each) 1. According to the Solow model: (a) long-run economic growth depends on technological progress (b) economic growth depends on investment decisions by the government (c) the saving rate can only a°ect the short-run growth rate (d) there is excess labor in the agricultural sector that can be used to fuel economic growth (e) a and c
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