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Final Exam- 2012

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University of Guelph
ECON 2650
Kurt Annen

Do not open this exam until told to do so. Final Exam, ECON*2650, Fall 2012 Department of Economics & Finance College of Management and Economics K. Annen, Fall 2012 You have 2 hours to complete this exam. You can use empty scrap paper and a calculator. 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 25 questions, for a total of 100 points. Name and Student ID: ECON*2650 University of Guelph Final Exam, Fall 2012 1. (3 points) Discuss the following claim: \If the PPP measure of a given country increases, then this country’s GDP expressed in international dollars increases." 2. (3 points) A researcher ▯nds out that any amount expressed in dollars equals one hundred times that amount when expressed in cents. (Wow, what a ▯nding!) What is the correlation coe▯cient r between a given set of dollar amounts and its corresponding amounts in cents? 3. (3 points) A researcher ▯nds incomes for a sample of people that belong to two groups. In the ▯rst group, ▯ 1 1200, s =1150, and n = 61. In the second group x ▯2= 1500, s 2 300, and n 2 81. Test whether incomes are signi▯cantly di▯erent from each other for these two groups of people by using the rule-of-thumb we learned in class. (In order to get full marks, you need to show your work!) 4. (3 points) Give ONE example of an ‘input’-measure of education. (Please, one example only!) 5. (3 points) Economists studied a community in an unknown place where there is perfect equality in the distribution of incomes. What is the standard deviation of incomes in this community? 6. (3 points) Discuss the following claim: \According to the Solow growth model, the growth rate of incomes per capita is zero for an economy in the steady state." 7. (3 points) The Human Development Index (HDI) is a measure composed of three dimensions. What are these three dimensions? 8. (3 points) Education can have private and public returns. Give ONE example of a public return to education. (Please, one example only!) Page 2 of 8 ECON*2650 University of Guelph Final Exam, Fall 2012 9. (3 points) Discuss the following claim: \Persons with a lower discount rate have stronger incentives to invest in an education." 10. Consider a data set with the following values: x = 10, x = 12, x = 16,3x = 20, x4= 21, 5 x 6 26, and x =735. (a) (3 points) Calculate the mean and the median. (b) (3 points) Plot a histogram where data is divided into two equally sized groups. 11. (5 points) We discussed the table below in class. It looks at the relationship between quantity and quality of education and income per capita growth. Summarize the ▯ndings related to the quantity and quality of education reported in Column (1) and (2) in this table. (Focus on the quantity vs. quality issue of education only!) Page 3 of 8 ECON*2650 University of Guelph Final Exam, Fall 2012 12. (3 points) Discuss the following claim: \The Income Gap Ratio satis▯es the ‘monotonicity axiom’ in poverty measurement." 13. (5 points) Robert Solow’s growth model predicts that initially poor countries grow faster than initially rich countries. Use the evidence reported in the Table included in Question 11 in this exam to discuss this claim. 14. (3 points) We often use the Gini coe▯cient to measure inequality in a country. Typically, this measure di▯ers between richer and poorer countries. What is { roughly {the value of the Gini in a typical rich country? What is { roughly { this value in a typical poor country? 15. (5 points) Consider the following claim: \In poor countries, parents do not send children to school because of a lack of income." Discuss this claim by using the evidence reported in Chapter 4 in Banerjee and Du o’s book ‘Poor Economics,’ which we discussed in class. (You NEED to use the evidence mentioned in this chapter to answer the question! If you haven’t read that chapter or you do not remember the discussion about the chapter, please don’t answer the question.) 16. (3 points) At the beginning of the semester, we discussed a histogram that grouped the average incomes of countries (PPP adjusted) for 2009 in 20 equally sized groups. Explain the most striking feature of this histogram. Page 4 of 8 ECON*2650 University of Guelph Final Exam, Fall 2012 17. An aid agency has a limited budget for poverty reduction. The objective of the
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