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ECS 3013Professor: Sharmila VishwasraoThe farther you get to the equator, the richer you are. Expropriation- how much the government can take away from a civilianList of Questions for Test 1.(For all theories you should know, main assumptions, basic structure, major conclusions, policy recommendations and criticisms)1.Define economic development.A.Traditional: sustained increase in real per capita income witha.No increase in the absolute level of povertyb.No worsening of the distribution of incomec.Improvements in the ability to meet basic human needs.B.Does GNP measure wellbeing?Sen (1998 Nobel) argues that there may be disparities between measured income and actual benefits because of i. Personal heterogeneity, illness, age, gender.ii. Environmental – heating requirements in the cold, diseases in tropicsiii. social climate – crime, violenceiv. relative status – what is normal for a society may vary.v. Distribution within a family – gender, age issues.Alternative Definition IFunctioning: What can a person achieve with his possessions?1. Ability to meet basic needs2. Self esteem3. Freedom to choose: development should increase the range of human choices. 2.What are the limitations of using GNI growth as a measure of development?A.GNI- the total domestic and foreign output claimed by residents of a country. It comprises gross domestic product (GDP) plus factor incomes accruing to residents from abroad, less the income earned in the domestic economy accruing to persons abroad. 1.GNI does not count stuff made in a state (country) by a foreign company2.GNI I an indicator of the level of national Development could be a basis of a country’s performance in the macro level but not on the household level.