431 Midterm 1 Review Sheet (Winter 2012)
1.
The income distribution in Spring City is as follows:
Income
Number of Residents with Given Income
$100
45
$200
45
$600
30
a.
Calculate the Poverty Gap Ratio (PGR) and the Head Count Ratio (HCR) if the poverty line is
$300.
b.
Draw the Lorenz Curve for this economy. Make sure to label the points and axes clearly.
c.
Calculate the Gini coefficient for this economy.
d.
If we take $120 from each resident in the highest income group, will it reduce the Gini coefficient
by more to split this money evenly among the residents with $100 incomes or those with $200?
Which will reduce the PGR by more? The HCR?
2.
You are evaluating a program that vaccinates children against measles to see its effects on school
attendance.
a.
Would you recommend that assignment to treatment and control groups be made at the individual
level, the school level, or the community level? Why?
b.
You have one year of data from before the vaccination program begins (1998) and three years of
data from afterward (1999, 2000, and 2002). You think that the effects of the vaccination program
may differ across time. Write a regression equation for the regression that you would run to find
separate effects of vaccination for each treatment year using the differenceindifference
technique. Make sure to say what the variables in your regression mean and give the expected sign
of your coefficients (where possible).
3.
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 Winter '08
 Mcintyre,F
 Economics, Econometrics, Regression Analysis, American Economic Review, The American Economic Review

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