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##### ECON 465 - UNC Study Resources
• 15 Pages
###### Chapter2

School: UNC

Course: Economic Development

2 PROCESSES 1) PROCESSES a) Introduction to Processes: I) Pseudoparallelism: rapid switching back and forth of the CPU between programs II) Multiprocessor: has two or more CPUs sharing the same physical memory B) THE PROCESS MODEL: I) Sequential Process:

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###### Solutions (ECON) 25

School: UNC

Course: Economic Development

B-24 CORRADO AND JORDAN Dixie Chickens pro forma 2001 Cash Flow Statement Net income Depreciation and amortization Changes in operating assets Changes in current liabilities Operating cash flow \$193 100 (50) 40 \$283 Net additions to properties Changes in

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###### Solutions (ECON) 23

School: UNC

Course: Economic Development

B-22 CORRADO AND JORDAN 10. Gross margin is gross profit divided by sales, where gross profit is sales less cost of goods sold. Operating margin is operating profit divided by sales, where operating profit is equal to gross profit less operating expenses.

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###### Solutions (ECON) 24

School: UNC

Course: Economic Development

FUNDAMENTALS OF INVESTMENTS B-23 18. Note that, measured in thousands, there are 120 shares. Book value per share (BVPS) is thus \$720/120 = \$6. Earnings per share (EPS) is \$144/120 = \$1.20 (as shown on the income statement). Cash flow per share (CFPS) is

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###### Solutions (ECON) 20

School: UNC

Course: Economic Development

FUNDAMENTALS OF INVESTMENTS B-19 11. V(0) = \$25 = [\$1.25(1+g)]/(.15g) ; g = 9.524% 12. V(0) = \$85 = D(1)/(.08 .05) ; D(1) = \$2.55 D(3) = \$2.55(1.05)2 = \$2.81 13. Retention ratio = 1 (\$5/\$12.50) = .60 Sustainable growth rate = .20(.60) = 12% 14. Sustainabl

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###### Solutions (ECON) 22

School: UNC

Course: Economic Development

FUNDAMENTALS OF INVESTMENTS B-21 Chapter 7 Earnings and Cash Flow Analysis Answers to Questions and Problems Core Questions 1. The 10K and 10Q are reports public firms must file with the SEC. They contain, among other things, financial statements includin

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###### Solutions (ECON) 19

School: UNC

Course: Economic Development

B-18 CORRADO AND JORDAN Chapter 6 Common Stock Valuation Answers to Questions and Problems Core Questions 1. The basic principle is that we can value a share of stock by computing the present value of all future dividends. 2. P/E ratios measure the price

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###### Solutions (ECON) 18

School: UNC

Course: Economic Development

FUNDAMENTALS OF INVESTMENTS B-17 19. For price-weighted indices, purchase equal numbers of shares for each firm in the index. For value-weighted indices, purchase shares (perhaps in fractional amounts) so that the investment in each stock, relative to you

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###### Solutions (ECON) 17

School: UNC

Course: Economic Development

B-16 CORRADO AND JORDAN 15. Share price after the stock split is \$15. Index value on 1/1/99 without the split is 45 (see above). (15 + 25 + 35)/d = 45 ; d = 75/45 = 1.667. 1/1/00: Index value = (12 + 40 + 35)/1.667 = 52.2. 1999 return = (52.2 45)/45 = 16%

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###### Solutions (ECON) 16

School: UNC

Course: Economic Development

FUNDAMENTALS OF INVESTMENTS B-15 8. The uptick rule prohibits short selling unless the last stock price change was positive, i.e., an uptick. Until recently, it applied primary to the NYSE, but the Nasdaq now has a similar rule. It exists to prevent bear

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###### Solutions (ECON) 13

School: UNC

Course: Economic Development

B-12 CORRADO AND JORDAN 10. You should probably buy an open end fund because the fund stands ready to buy back shares at NAV; with a closed-end fund, another buyer must make the purchase, so it may be more difficult to sell at NAV. We should note that an

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###### Solutions (ECON) 15

School: UNC

Course: Economic Development

B-14 CORRADO AND JORDAN Chapter 5 The Stock Market Answers to Questions and Problems Core Questions 1. The new car lot is a primary market; every new car sold is an IPO. The used car lot is a secondary market. The Chevy retailer is a dealer, buying and se

• 1 Page
###### Solutions (ECON) 14

School: UNC

Course: Economic Development

FUNDAMENTALS OF INVESTMENTS B-13 20. NAV at IPO = \$10(1 .09) = \$9.10 (P \$9.10)/\$9.10 = .10 ; P = \$8.19 The value of your investment is 5,000(\$8.19) = \$40,950, a loss of \$9,050 in one day.

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###### Solutions (ECON) 12

School: UNC

Course: Economic Development

FUNDAMENTALS OF INVESTMENTS B-11 Chapter 4 Mutual Funds Answers to Questions and Problems Core Questions 1. Mutual funds are owned by fund shareholders. A fund is run by the fund manager, who is hired by the fund directors. The fund directors are elected

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###### Solutions (ECON) 8

School: UNC

Course: Economic Development

FUNDAMENTALS OF INVESTMENTS 16. 17. Assets Proceeds from sale Initial margin deposit Total \$100,000 100,000 \$200,000 Liabilities and account equity Short position \$100,000 Account equity 100,000 Total \$200,000 Assets Proceeds from sale Initial margin depo

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###### Solutions (ECON) 26

School: UNC

Course: Economic Development

FUNDAMENTALS OF INVESTMENTS B-25 20. Using the benchmark from question 18, projected stock prices are: BVPS P/B = (\$841/120) 4 = \$28.03 EPS P/E = \$1.61 20 = \$32.20 CFPS P/CF = (\$283/120) 12.31 = \$29.03 Thus, projected prices assuming a 10% sales increase

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###### Solutions (ECON) 27

School: UNC

Course: Economic Development

B-26 CORRADO AND JORDAN Chapter 8 Stock Price Behavior and Market Efficiency Answers to Questions and Problems Core Questions 1. There are three trends at all times, the primary, secondary, and tertiary trends. For a market timer, the secondary, or short-

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###### Solutions (ECON) 28

School: UNC

Course: Economic Development

FUNDAMENTALS OF INVESTMENTS B-27 8. For initial investments of equal value, will need to purchase 1.6 shares of Pepsi for every share of Coke. Suppose you buy 5 shares of Coke and 8 shares of Pepsi. Month 1 2 3 4 5 6 Coke \$200 225 240 220 245 275 Pepsi \$2

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###### Solutions (ECON) 42

School: UNC

Course: Economic Development

FUNDAMENTALS OF INVESTMENTS B-41 Chapter 12 Government Bonds Answers to Questions and Problems Core Questions 1. T-bills are pure discount, zero-coupon instruments with original maturities of a year or less. T-bonds are straight coupon bonds with original

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###### Solutions (ECON) 41

School: UNC

Course: Economic Development

B-40 CORRADO AND JORDAN 10. The advantage is that the coupon adjusts up when interest rates rise, so the bond price s won fall (at least not nearly as much as it would have). It cuts both ways, however. The t coupon will fall if interest rates decline, so

• 1 Page
###### Solutions (ECON) 40

School: UNC

Course: Economic Development

FUNDAMENTALS OF INVESTMENTS B-39 Chapter 11 Corporate Bonds Answers to Questions and Problems Core Questions 1. The four main types are debentures, mortgage bonds, collateral trust bonds, and equipment trust certificates. 2. A bond refunding is a call in

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###### Solutions (ECON) 39

School: UNC

Course: Economic Development

B-38 CORRADO AND JORDAN b. P2 = \$50(PVIFA3%,16) + \$1000(PVIF3%,16) = \$1,251.22 P0 = \$1,100 = \$50(PVIFAr%,4) + \$1,251.22(PVIFr%,4) ; r = 7.614%, yield = 15.23% The realized yield is greater than the expected yield when the bond was bought because interest

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###### Solutions (ECON) 37

School: UNC

Course: Economic Development

B-36 CORRADO AND JORDAN 15. A premium bond is one with a relatively high coupon, and, in particular, a coupon that is higher than current market yields. These are precisely the bonds that the issuer would like to call (and replace with a lower-coupon bond

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###### Solutions (ECON) 38

School: UNC

Course: Economic Development

FUNDAMENTALS OF INVESTMENTS B-37 All else the same, the longer the maturity of a bond, the greater is its price sensitivity to changes in interest rates. 18. Initially, at a YTM of 9 percent, the prices of the two bonds are: PJ = \$20(PVIFA4.5%,20) + \$1000

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###### Solutions (ECON) 36

School: UNC

Course: Economic Development

FUNDAMENTALS OF INVESTMENTS B-35 8. Price and yield move in opposite directions; if interest rates rise, the price of the bond will fall. This is because the fixed coupon payments determined by the fixed coupon rate are not as valuable when interest rates

• 1 Page
###### Solutions (ECON) 35

School: UNC

Course: Economic Development

B-34 CORRADO AND JORDAN Chapter 10 Bond Prices and Yields Answers to Questions and Problems Core Questions 1. Premium (par, discount) bonds are bonds that sell for more (the same as, less) than their face or par value. 2. The face value is normally \$1,000

• 1 Page
###### Solutions (ECON) 34

School: UNC

Course: Economic Development

FUNDAMENTALS OF INVESTMENTS B-33 19. Feb01 STRIPS: P* = 100/[1 + (.04859+.0025) / 2 ]2 = 95.080% of par ?% = (95.080 95.3125)/95.3125 = 0.244% Feb03 STRIPS: P* = 100/[1 + (.05529+.0025) / 2 ]6 = 84.290% of par ?% = (84.290 84.90625)/84.90625 = 0.726% Feb0

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###### Solutions (ECON) 33

School: UNC

Course: Economic Development

B-32 CORRADO AND JORDAN 16. [1 + (.05249/2)]4 = [1 + (.04859/2)]2(1+f1,1) ; f1,1 = 5.719% f1,1 = 100/[1.05719] = 94.590% of par = 94:19 rounded to the nearest 32nd. Note that this price can be found directly from the relationship fT,K = 100PT+K/PT where t

• 1 Page
###### Solutions (ECON) 32

School: UNC

Course: Economic Development

FUNDAMENTALS OF INVESTMENTS B-31 8. They are coupon interest, note principal, and bond principal. Recalling that each STRIPS represents a particular piece of a Treasury note or bond, these designations tell us which piece is which. A ci is one of the many

• 1 Page
###### Solutions (ECON) 31

School: UNC

Course: Economic Development

B-30 CORRADO AND JORDAN Chapter 9 Interest Rates Answers to Questions and Problems Core Questions 1. Short-term rates have ranged between zero and 14 percent. Long-term rates have fluctuated between about two and 13 percent. Long-term rates, which are les

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###### Solutions (ECON) 30

School: UNC

Course: Economic Development

FUNDAMENTALS OF INVESTMENTS B-29 d. Despite the fact that this information is obviously less open to the public and a clearer signal of imminent price gains than is the scenario in part (c), the conclusions remain the same. If the market is strong form ef

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###### Solutions (ECON) 29

School: UNC

Course: Economic Development

B-28 CORRADO AND JORDAN 12. If the market is efficient, then market timing is a bad idea. Trying to time the market will only mean that over a long period, the investor will underperform a strategy that stays fully invested. A timing strategy will incur s

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###### Solutions (ECON) 6

School: UNC

Course: Economic Development

FUNDAMENTALS OF INVESTMENTS d. B-5 Street name registration will probably be required for anything other than a straight cash purchase, so, with a margin purchase for example, it will likely be required. 7. Probably none. The advice you receive is uncondi

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###### Solutions (ECON) 10

School: UNC

Course: Economic Development

FUNDAMENTALS OF INVESTMENTS B-9 Intermediate Questions 11. Preferred A: dividend yield = \$1.20/\$11.625 = 10.3% Preferred B: dividend yield = \$3.00/\$32 = 9.4% ; A has the higher dividend yield. B was more actively traded than A, 8,500 shares compared to A

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###### Exercise+6+-+HD+model

School: UNC

Class Exercise 6 - ECON 465 Harris Todaro model Consider the Harris-Todaro Model of Rural-Urban migration. Wage is fixed at \$10 with employment at 2000 in the urban sector. Assume that workers are rational decision makers. What is the total urban force at

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• ###### Example+2-+Income+Inequality+measures
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###### Example+2-+Income+Inequality+measures

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ECON 465 Example 2 Measures of Income Inequality Consider the following distribution in 2 different countries: Country M: cfw_1, 1, 1, 3, 4 Country N:cfw_1,1,2,2,4 a. In which of the two countries is Income Inequality higher? Explain using the Range and c

• 1 Page
###### Example+4+-+MDPI-1

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ECON 465: Example 4 MDPI Household 1 (Size = 9) Health At least one member is malnourished One or more children have died Education No one has completed 5 years of schooling At least one school-age child not enrolled in school Living Conditions No electri

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• ###### Exercise+5+-+Fertility+rate
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###### Exercise+5+-+Fertility+rate

School: UNC

Exercise 5 ECON 465, Summer Session I 2014 Example on Fertility Rate 1. a. In a developing country, a households income is \$1000 per year. There are no job opportunities for women in this country. The direct cost of a child is \$200. A child is expected to

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###### Example1

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ECON 465 Summer Session I, 2014 Example 1 1. Chinas per capita income in 2012 was 30,000 RMB and the exchange rate was \$1 = 6 RMB. The price level in the US was 105 and the price level in China was 80. What is Chinas per capita income in USD using Atlas

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###### Example+3+-+Poverty

School: UNC

ECON 465: Example 3 Poverty Measures 1. Consider the following two countries: Given the income distribution: A: cfw_1, 1, 2, 2, 4 B: cfw_1.5,1.5,1.5,1.5,4 If the poverty line is at 3, calculate the following measures for the two countries: a. Number in Po

• 4 Pages

School: UNC

ECON 465 Homework 5 Summer Session I, 2014 1. Co-ordination failure when multiple equilibria are present is seen as one cause of underdevelopment. a. Explain using a payoff matrix. Let us assume that there are two farmers in a village in a developing nati

• 4 Pages

School: UNC

ECON 465 Homework 5 Summer Session I, 2014 1. What did Malthus fail to take into consideration in his Population trap analysis? Explain Population trap drawing a graph and discuss why it is flawed? Please use the graph presented in the 11th edition to dis

• 4 Pages

School: UNC

ECON 465, Summer Session I, 2014 Homework 6 1. a. Let us say that Urban Wage in Mumbai, India is fixed at Rs. 100 (per hour) and formal sector employment is at 1.5 million. If rural wage in villages from which people migrate to Mumbai is Rs. 20, what does

• 4 Pages
###### Homework+5

School: UNC

ECON 465 Homework 5 Due in class on May 30, 2014 1. What did Malthus fail to take into consideration in his Population trap analysis? Explain Population trap drawing a graph and discuss why it is flawed? Please use the graph presented in the 11th edition

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###### Homework+4

School: UNC

ECON 465 Homework 4 Due in class on May 28, 2014 1. Co-ordination failure when multiple equilibria are present is seen as one cause of underdevelopment. a. Explain clearly using a payoff matrix. (7.5 points) b. Also use the graph of the Big Push Model to

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###### Homework+3

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ECON 465 Homework 3 Due in class on May 21, 2014 Please keep a copy for studying for test 1 1. a. What determines long- run growth rates in Harrod-Domar model? If the capital-output ratio is 3 in a country, and if national savings rate is 0.09, what is th

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###### Homework+2

School: UNC

ECON 465 Homework 2, Summer Session I, 2014 Due in class on May 20, 2014 1. Given the following data, calculate range, CV, the Kuznets ratio for the highest 20% and the lowest 20% of population, and Gini coefficient. Also draw the Lorenz curve. Does the s

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###### Homework+6

School: UNC

ECON 465, Summer 2014 Homework 5: Due in class on June 3, 2014 PLEASE KEEP A COPY OF YOUR ANSWERS TO STUDY FOR TEST 2 1. a. Let us say that Urban Wage in Mumbai, India is fixed at Rs. 100 (per hour) and formal sector employment is at 1.5 million. If rural

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###### Homework9

School: UNC

ECON 465: Summer Session I 2014 Homework 9 - Due on June 13, 2014 1. What does the neo-classical model imply about how developing countries should allocate their resources when they trade with the rest of the world? Draw the Production Possibility frontie

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###### Notes+on+Agriculture

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Notes on Agriculture Integrated Rural Development: 1. Increase agricultural productivity of small farmers using changes in technology, institutions and price incentives. 2. Increased demand for agricultural output resulting from urban development. 3. Expa

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###### Homework7

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ECON 465:Homework 7 Due in class on June 9, 2014 1. A farmer can chose between two farming methods, traditional and modern. Let us say that traditional farming methods yield on average 190 kilograms of grains per hectare annually with a standard deviation

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###### Solutions (ECON) 11

School: UNC

Course: Economic Development

B-10 CORRADO AND JORDAN 20. The very first call option listed has a strike price of 10 and a quoted premium of 57/8. This can be right because you could buy a option for \$57/8 and immediately exercise it for t another \$10. You can then sell the stock for

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###### Solutions (ECON) 7

School: UNC

Course: Economic Development

B-6 CORRADO AND JORDAN Assets 200 shares of Mobil \$13,000 Total \$13,000 Liabilities and account equity Margin loan \$7,500 Account equity 5,500 Total \$13,000 Margin = \$5,500/\$13,000 = 42.3% 12. 600 shares \$50 per share = \$30,000; initial margin = \$20,000/\$

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###### Solutions (ECON) 5

School: UNC

Course: Economic Development

B-4 CORRADO AND JORDAN Chapter 2 Buying and Selling Securities Answers to Questions and Problems Core questions 1. Purchasing on margin means borrowing some of the money used. You do it because you desire a larger position than you can afford to pay for,

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###### Solutions (ECON) 4

School: UNC

Course: Economic Development

FUNDAMENTALS OF INVESTMENTS Risk premium: d. B-3 Var = 1/6[ (.206.082)2 + (.202.082)2 + (.104.082)2 + (.137.082)2 + (.038.082)2 + (.242.082)2 + (.125 .082)2 ] = 0.02356 Standard deviation = (0.02356)1/2 = 0.1535 = 15.35% Before the fact, the risk premium

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###### Solutions (ECON) 9

School: UNC

Course: Economic Development

B-8 CORRADO AND JORDAN Chapter 3 Security Types Answers to Questions and Problems Core Questions 1. The two distinguishing characteristics are: (1) all money market instruments are debt instruments (i.e., IOUs), and (2) all have less than 12 months to mat

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###### Solutions (ECON) 3

School: UNC

Course: Economic Development

B-2 10. CORRADO AND JORDAN Prob( Return < 2.94 or Return > 13.76 ) 1/3, but we are only interested in one tail; Prob( Return < 2.94) 1/6. 95%: 99%: 5.41 2 = 5.41 2(8.35) = 11.29% to 22.11% 5.41 3 = 5.41 3(8.35) = 19.64% to 30.46% Intermediate Questions 11

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###### Solutions (ECON) 2

School: UNC

Course: Economic Development

FUNDAMENTALS OF INVESTMENTS B-1 Chapter 1 A Brief History of Risk and Return Answers to Questions and Problems Core Questions 1. No, whether you choose to sell the stock or not does not affect the gain or loss for the year; your stock is worth what it wou

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• ###### Social Justice and Global Trade
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###### Social Justice And Global Trade

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Social Justice and Global Trade Joseph Stiglitz Far Eastern Economic Review; Mar 2006; 169, 2; ABI/INFORM Global pg. 18 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Reproduced with permission of th

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Another Perspective on the Human Development Index (www.nytimes.com) June 1, 2009 What Does the Human Development Index Really Measure? By Francisco Rodriguez A Guest Post Last week, Justin Wolfers presented a simple yet apparently powerful critique of th

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Conference Urban-Rural Linkages and Migration th September 16 2009, Plenary Session Linkages between Internal and International Migrations: Policy Implications for Development1 Claudia Natali, International Organisation for Migration (IOM), Thailand-Offic

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• ###### EconomistarticleforECON465
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###### EconomistarticleforECON465

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Buying farmland abroad: Outsourcing's third wave I The Economist Page 1 of 6 Buying farmiand abroad 7 Outsourcing's third way Rich food importers are acquiring vast tracts of poor countries' farmland. Is this beneficial foreign investment or neocolon

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###### Notes+on+Chapter+12

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Some important points on Trade: Chapter 12 Globalization and what it means: Role of GATT and WTO Five Basic Issues about Trade and Development 1. Effect of trade on economic growth 2. Trade and income inequality 3. Trade and development 4. LDCs role in tr

• 3 Pages
###### NotesonPopulation

School: UNC

High Fertility Rates: Some conflicting opinions Not a Real Problem: 1. The problem is not population growth but other issues: (i) Underdevelopment which results in high fertility rate as a source of income and social security. (ii) World Resource Depletio

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• ###### Notes+on+concluding+points+on+Agriculture
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###### Notes+on+concluding+points+on+Agriculture

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Agriculture Transition: 1. From subsistence to Mixed and Diversified farming Changes in farming methods includes land augmentation and diversification Economic incentives such as access to credit, fertilizer, water, crop information, marketing facilitie

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###### Homework+1

School: UNC

ECON 465 Homework 1, Summer Session I, 2014 Due in class on May 16, 2014 1. The per capita GDP in Bangladesh during 2008 was 49000 takas. If the exchange rate between the U.S. dollar and the taka is \$1 = 70 takas what is the per capita GDP of Bangladesh w

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