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ECN115A midterm 2007 v3 Key v3

ECN115A midterm 2007 v3 Key v3 - Economics of...

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1 Economics of Development (ARE/Economics 115-A): Growth, Poverty Alleviation, and the Environment Dr. Stephen A. Vosti Fall, 2007 Midterm Exam Key Please note that the following are suggested answers; other answers may be acceptable. Please write ALL your answers in your Blue Books. We will not collect the exam sheets, nor will anything appearing on these sheets be included in the grading process. Write legibly; you will receive no credit for answers we cannot read. Make sure your full name is on all the Blue Books you submit. Please ‘nest’ Blue Books before submitting them. You have 80 minutes to complete this exam; all Blue Books must be submitted at the end of the exam period. The points associated with each question have been identified; use this information to organize your time. Boa sorte! 1. Concepts, Terms, and Definitions – ( 20 points total , 10 points each) Select two of the following three sets of terms and in each case: 1) define each term in the sets you select and 2) explain the interrelationships (if any exist) among the terms in each of the selected sets. Feel free to use diagrams and/or equations in your definitions and in your explanations of interrelationships. 1.a. demographic transition, dependency ratio, demographic dividend, human capital demographic transition – the process by which the size and age composition of populations change; it is driven first by declines in the death rate followed with a lag by declines in the birthrate, the combined effects of which lead to increases in population size and first a widening of the base of the population pyramid, then a narrowing of that same base. dependency ratio – the ratio of the number of dependents in a population (usually aged 0-15 and 55+) to the number of adults likely to participate in the labor force (usually aged 16-54) demographic dividend – the ‘dividend’ often attributed to populations that have high proportions of adult laborers (or low dependency ratios) when compared with other populations; the ‘dividend’ is comprised of two parts a) the large workforce and the relatively low wage rates they are likely to be paid, and the relatively high savings rates vis-à-vis other populations. human capital – a set of characteristics of individuals that comprise a population, e.g., health, education, job skills, etc. interrelationships among terms – the demographic transition can (and does) provide a competitive advantage to populations, especially for goods/services that require labor-intensive production processes; however, having relatively more ‘bodies’ is generally not sufficient to ‘cash in’ on the demographic dividend, since investments in human capital are generally required to make those workers suitable for jobs and productive
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2 1.b. weather shock, production shortfall, failed development policy, famine weather shock – rainfall, temperature (e.g. frost), or other weather events that affect agricultural production. production shortfall
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ECN115A midterm 2007 v3 Key v3 - Economics of...

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