PSLecture4 - Problem Set for Lecture 4: The Convergence...

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Problem Set for Lecture 4: The Convergence Issue: On Closing the Per Capita Income Gap Between Developing Countries and Industrial Countries from 1950 to 2000 [October 6, 2009] Note: Questions marked T will be available for discussion in Tutorials and are possible questions for tutorial and for tests. T4.1 “Donald notes that there is something unusual about the fact that in 1997, at official foreign-exchange rates, Japan had a per capita GDP level of almost $38,000 [US] against the U. S. level of nearly $29,000. Donald does not believe that the Japanese have a higher standard of living than the United States.” Do you? Note: The issues in Questions 4.1 were covered in the material for Lecture 2, although the Todaro reading for Lecture 4 [Reading 4.1] provides some additional and important conversion characteristics into U.S. dollars. T4.2 “Debra wonders about the following ‘convergence thesis’: since all countries have the availability to the same technology, then all countries should have, through a reasonable period of time, approximately the same level of GDP per capita.” What economic reasons might you offer that this has not happened. Questions 4.3 to 4.8 pertain to the Thirlwall data presented in Reading 4.2 which is summarized below. Students are to accept the results presented in the Thirlwall reading – no specific computations are required in order to answer these questions. However, the results presented by Thirlwall, relative to the four questions which he asks, are expected to be known. According to the Rule of 72 [ which reflects the power of compounding], an amount which
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PSLecture4 - Problem Set for Lecture 4: The Convergence...

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