Tshwane University of Technology

ECON ALE30BT

Chapter 5

1)About how many people are living in extreme poverty in the world? Which regions have the greatest percentages of people living in extreme poverty?

2.Explain the difference between size and functional measures of income distribution.

3.What is a Lorenz curve? Draw one, labeling the axes.

4. Explain why a Lorenz curve can never lie to the left or above the 45 degree line.

5. Using a Lorenz curve diagram, explain how to calculate the Gini coefficient.

6. Distinguish between economic growth by modern sector enlargement, modern sector enrichment and traditional sector enrichment. For each of the three cases, show what happens to absolute poverty and to relative inequality, using a precise measure of each.
7. Generally speaking ,higher income countries tend to have less income inequality than low-income countries, however this does not always hold true. What could cause a low-income country to have low-income inequality?
8. Discuss the benefits of using a “poverty weighted” index of GNP growth as a measure of social welfare as opposed to using the growth in GNP to measure change in social welfare.
9. Increasing GNP is a necessary but not a sufficient condition for improving living standards in less developed countries. True or false, explain.
10. What are the characteristics of the poor (be specific)?

11. Why are about 100 million girls and women said to be “missing” in developing countries?
12. What are factor price distortions, and what are their major causes in developing countries?
13. Just what is it that makes a technology “appropriate” for a developing country?

14. Discuss the reasons why developing countries so often use a technology with an excessively high capital labor ratio.