Section 1) Real GDP per capita(c) 2) D all of the above 3) A sub-saharan Africa 4) D south and east asia 5) B decreased 6) A 7) C 8) B 9) D 10) A Section 2 1) a) b) sachs c) He suggest that the foreign aid should increase drastically if this underdeveloped countries are to develop. 2) a) badlandia has more inequality since its ratio tends towards 1 where inequality is at maximum. The higher the value of the coecient, the higher the inequality of income distribution; the lower it is, the moreequal the distribution of income.
b) 0.25 c) for tylandia is above because it represents less inequality therefore there is little gap between it and 45 degrees line 3) a) economic growth refers to the increase in national income while economic development refers to improvement in basic living conditions or standard of living. b) It is harder to measure development because it can easily be quantified.
Growth is easily measurable because of its numerical nature. Development also involves looking at many conditions satisfaction of which defines whether one is poor or not. c) Human development index. d) There are many indices because in order to certify whether one living conditions has improved or not different variables and conditions have to be looked at but not one. To be on good living standard one has to meet several basic living standards. e) 4) a) Us GDP= 101200 $, Thai GDP= 206,000 baht b) Thai GDP= 6867 $ c) 11,200 $ 5) a) The main channel where inequality will increase growth is in instances whereby the top in the society with highest income saves more and invest.
When they invest they create opportunities for the rest of the main stream population. Because savings rate increase with income the richer individuals will invest more in economic growth. b) -Changing institutions, whereby institution are converted to cater for the need of the poor rather than being development oriented. - Political instability, whereby the poor up rise against perceived oppression by the richer - Dampen aspirations, this leads to frustration and resulting to crime - Dependence, increase dependence lower savings rate and as result low level of investment