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Midterm 1- 2012

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ECON 2650
Kurt Annen

Do not open this exam until told to do so. Midterm 1a, ECON*2650, Fall 2012 Department of Economics & Finance College of Management and Economics K. Annen, Fall 2012 You have 1 hour and 30 minutes to complete this exam. You can use empty scrap paper and a calculator. The exam has to be written with a pen. Please write short and concise answers that are straight to the point in the space provided. If you use more space than provided, points are taken o▯. This exam has 15 questions, for a total of 100 points. Name and Student ID: ECON*2650 University of Guelph Midterm 1a, Fall 2012 1 Incomes and Poverty across Countries 1. (5 points) Consider a household survey that concludes that poor households spend only 0.6% of an 1% increase in income on food. Can you conclude from this ▯nding that a nutrition-based poverty trap does not exist for these households? Carefully explain. 2. (5 points) Consider a poor country where an aid donor introduced a policy that reduced the Headcount Ratio in that country. But when they calculate the Income Gap Ratio (i.e. the income gap divided by the headcount times the poverty line) they observe that it has actually increased. Can you explain this discrepancy. What can you infer? What must have happened? Explain carefully. 3. After the revision of the PPPs in 2005, the PPP measure for India increased. (a) (5 points) Will that change a▯ect the headcount index when using the national poverty line of India at that time? Explain. (b) (5 points) Will that change a▯ect the headcount index in India when using an international poverty line, as for example 2$PPP per day? Explain. Page 2 of 7 ECON*2650 University of Guelph Midterm 1a, Fall 2012 4. The following Table lists the incomes of the poorest 5 countries (data taken from the WDI for the year 2009). Country GDP Per Capita per year Congo, Dem. Rep. 298 Burundi 362 Liberia 371 Eritrea 494 Niger 622 (a) (5 points) Draw a histogram where the ▯ve countries are listed in two equally sized categories. (b) (4 points) Calculate the following descriptive statistics: i. Mean: ii. Median: iii. Standard Deviation: iv. Range: (c) (6 points) Calculate the following z-scores: i. Calculate the z-score for the lowest value in your distribution: ii. Calculate the z-score for the highest value in your distribution: iii. Which of the two values above is more ‘usual?’ 5. (5 points) What is a PPP? (in two words) Page 3 of 7 ECON*2650 University of Guelph Midterm 1a, Fall 2012 6. (5 points) Consider a country where the ratio GNP/GDP equals 4. What can you infer about that country? 7. (5 points) Consider the following claim: \To use the human development index (HDI) as a measure of ‘development’ does not yield any additional information as compared to simply using GNI per capita. We, therefore, should use the simpler measure which is GNI per capita." Use
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