Econ320, F01 - Page 1

UNIVERSITY OF VICTORIA
EXAMINATION DECEMBER 2003
ECONOMICS 320, F01
TO BE ANSWERED IN BOOKLET

DURATION: 2.5 HOURS

INSTRUCTOR: Ramani Kumar

STUDENTS MUST COUNT THE NUMBER OF PAGES IN THIS EXAMINATION PAPER

BEFORE BEGINNING TO WRITE, AND REPORT ANY DISCREPANCY IMMEDIATELY TO
THE INVIGILATOR.
THE QUESTION PAPER HAS 5 PAGES.
________________________________________________________________________
Instructions: Answer all questions in the booklet.
Total marks: 100

(24 x 1 =24 marks)

Part I: Multiple Choice
Write down the question number and the alphabet of the correct choice in your answer
booklet. DO NOT CIRCLE THE ANSWER HERE. No credit will be given for
explanation.
(1) Traditional measures of economic development include
a. GNP or GDP growth rates
b. income per capita growth rates.
c. a only
d. both a and b
(2) Development economics must have a wider scope than traditional economics because
a. values and attitudes play little role in the pace of development
b. people in developing countries do less utility maximizing
c. transformation of social institutions is necessary for development
d. all of the above
(3) Developing countries are commonly characterized by
a.
low levels of living, high levels of income inequality, and high dependency burdens
b.
low levels of productivity, prevalence of imperfect markets, and high rates of population growth
c.
primary-product exports, inadequate education and vulnerability in international relations.
d.
all of the above
(4) One of the components of Human Development Index is
a. the percentage of population who are high school graduates
b. the average daily intake of protein
c. life expectancy at birth
d. number of doctors per 100 people in the population
(5) Which measure uses a common set of international prices for all goods and services produced?
a. purchasing power parity income levels
b. GNP price deflators
c. foreign exchange rate conversions to U.S. dollars
d. the exchange rate
(6) Which of the following is not one of Kuznet's six characteristics of modern economic growth?
a. High rates of infrastructure amelioration
b. High rates of growth of per capita output and population
c. High rates of structural transformation of the economy
d. High rates of social and ideological transformation

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(7) Neutral technological progress occurs when
a. higher output levels are achieved with the same quantity and combinations of factor inputs
b. higher output levels are achieved by more capital intensive methods
c. higher output levels are achieved by more labor intensive methods
d. higher output levels are achieved
(8) Conditions of today's developed countries at the start of their industrialization differ from
conditions in the developing world in that
a. population growth rates were higher
b. more advanced technology was available
c. there were more opportunities for development assistance
d. there was growing urbanization
(9) According to the Harrod-Domar model,
a. there is surplus labor in the agricultural sector that can be used to fuel economic growth
b. economic growth depends on wise public investment decisions by the government
c. economic growth depends on saving and investing
d. the economy must be in the take-off stage
(10) The neocolonial dependence model is most closely aligned with which sort of thinking?
a. stoicism
b. classical economic thought
c. neoclassical economic thought
d. Marxism
(11) An equilibrium is said to be "stable" when
a.
the S-shaped function cuts the 45-degree line from below.
b.
the S-shaped function cuts the 45-degree line from above.
c.
if expectations changed and the system moved slightly above the equilibrium, there would be
a tendency to move even further away from that equilibrium
d.
b and c are both correct
(12) According to the Kuznets inverted-U hypothesis,
a. income inequality rises as per capita income rises
b. income inequality first rises then falls as per capita income rises
c. income inequality first falls then rises as per capita income rises
d. none of the above - there is no pattern
(13) What conclusion can be reached from the following data on income shares?

a.
b.
c.
d.

Percentage of Income Received by

Lowest 40%
Highest 20%
Bangladesh
17.3
45.3
Indonesia
14.4
49.4
absolute poverty is more widespread in Bangladesh
the size distribution of income is more unequal in Indonesia
Bangladesh has adopted a strategy of redistribution with growth
growth in Bangladesh is calculated using poverty weights rather than income weights

(14) Assuming that the Gini coefficient for Egypt is 0.403 and the Gini coefficient for Australia is
0.404, it is possible to conclude that both Egypt and Australia have
a. virtually the same number of households in absolute poverty
b. virtually the same percentage of households in absolute poverty
c. virtually the same level of the Human Development Index
d. none of the above.
(15) The number of live births per 1000 people in the population per year is the
a. hidden momentum of population growth
b. population growth rate
c. demographic transition
d. crude birth rate

Econ320, F01 - Page 1

(16) The proportion of the total population aged 0 to 15, and over 65, is known as the
a. dependency burden
b. unproductive population
c. surplus labor
d. population momentum
(17) If the rural wage is $4 per day, urban modern sector employment can be obtained with .25
probability and pays $12 per day, and if urban traditional sector daily income is $2 per day, the
simple one-period Todaro migration model predicts that
a. there will be rural-urban migration
b. there will be no migration
c. there will be urban-rural migration
d. it cannot be determined without more information
(18) In the Todaro migration model,
a.
migration is triggered by differences in expected incomes between rural
and urban areas
b.
the urban wage is institutionally determined and inflexible downward
c.
there is a minimum wage that applies to rural areas
d.
a and b only
(19) The informal sector exhibits
a. free entry
b. labor intensive methods
c. small, competitive firms
d. all of the above
(20) The supply of public school places is determined by
a. individuals' demand for education
b. direct and indirect costs of schooling
c. political processes, often unrelated to economic criteria
d. all of the above
(21) Comparing the costs and benefits, both private and social, of education leads economists to the
conclusion that
a. the privately optimal strategy would be to focus on private education
b. the socially optimal strategy would be to focus on secondary education
c. the socially optimal strategy would be to focus on primary education
d. the privately optimal strategy would be to focus on secondary education
(22) Research has shown that
a. the more educated is the mother, the healthier her children will be
b. intake of vitamins A and C does not seem to increase with income
c. increases in income may lead to a substitution towards less nutritional "junk" foods
d. all of the above
(23) Sustainable development means
a. emphasizing the role of the market
b. emphasizing the role of government
c. meeting the present generation's needs without compromising the needs of future generations
d. maintaining output growth at a constant rate
(24) The free rider problem is a situation in which
a. effluents such as CFCs combine with ozone and decrease concentrations of that protective
chemical
b. one agent secures benefits that others pay for
c. there are excessive subsidies given to polluting buses or other forms of mass transit
d. perfect property rights exist

Econ320, F01 - Page 1

Part II: Define the following concepts:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)

(10 x 2.5 = 25 marks)

Subsistence economy
Hidden momentum of population growth
Common Property Resource
Poverty gap
Total Fertility Rate (TFR)
Agglomeration economies
Educational gender gap
Sustainable Development
Coordination failure
Urban giantism

Part III: Short essay questions

(3 x 5 = 15 marks)

Use diagrams/ graphs where necessary to explain your answer.

(1) List and define any two measures of poverty that you have learnt in this course.
Discuss how each of the measures are constructed?
(2+3=5 marks)
(2) Explain the changing relationship between Growth and inequality and Growth and
poverty
(2.5+2.5=5 marks)
(3) Illustrate and explain child labor as a bad equilibrium. Under what circumstances
should a country favor a total ban on child labor?
(4+1=5 marks)
Part IV: Long essay question

(1 x 24 = 24 marks)

There are two main questions. Choose to answer only one of the main questions.
Provide the answers to each of the sub-components of the main question of your choice.
(1.a) Compare and contrast peasant agriculture systems in Latin America, Asia, and
Africa?
(6 marks)
(1.b) Explain why a peasant farmer would resist innovation in agriculture? (6 marks)
(1.c) Is share cropping economically inefficient? Illustrate and explain.
(8 marks)
(1.d) Provide the components of a successful agricultural strategy for women performing
60-90% of the work in rural areas.
(4 marks)

OR

Econ320, F01 - Page 1

(2.a) Explain the theory of demographic transition and its applicability to developing
countries.
(6 marks)
(2.b) Explain the Malthusian and household (theory of) fertility models.
(8 marks)
(2.c) Argue for and against the statement Population growth is a real problem. What is
the consensus opinion on this issue?
(8 marks)
(2.d) List four policy approaches that developing countries can adopt to stabilize their
population.
(2 marks)

END