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Chapter 2 1. Explain how low levels of living can turn into a vicious cycle in developing countries.
2. Explain some of the similar problems faced by otherwise diverse countries in Africa, Asia, and Latin America. lower level of living and productivity Low level of human capital.
4. Explain why purchasing power parity measures of income levels tend to show a smaller difference between poor and rich countries.
= Adjustments are made for differing relative prices across countries to that living standards may be measured more accurately. 5. What are the three main indicators that make up the Human Development Index?
6. If countries are first ranked by level of real GDP per capita, and then by the value of the Human Development Index, would you expect the ranking of countries to be similar or different. Explain
7. Comment on the following statement: The level and growth rate of real GDP per capita can be a misleading indicator of development. At the same time, countries that experience sustained increases in real GDP per capita over time will tend to be more developed.

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