Midterm 1 Solutions

Midterm 1 Solutions - Econ 116 - Developmental Economics...

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Econ 116 - Developmental Economics First Midterm Exam - Fall 2011 Solutions - 50 Points Possible 1. (20 points) A. Life Expectancy, Education, Income (2 points each) B. HDI utilizes the geometric mean. (2 points) The provided example demonstrates that exceptionally low values of any one of the sub-indices leads to a signi cantly lower mean value under the geometric mean than under the arithmetic mean. (3 points) The use of the geometric mean is thus preferred by the United Nations because high performance in one area (e.g.- income) should not completely substitute for poor performance in another area (e.g.- health or education). (3 points) C. HDI will not necessarily increase,(2 points) because the sub-indices (and HDI itself) are relative measures of performance in comparison to the best performers in each area. (2 points) Therefore, absolute increases in performance in the three areas (income, life expectancy, and education) will not necessarily raise the HDI value of a country because the HDI calculations also depend on the
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This note was uploaded on 01/20/2012 for the course ECON 116 taught by Professor Hoshi during the Spring '08 term at UCSD.

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Midterm 1 Solutions - Econ 116 - Developmental Economics...

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