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ECO349 Midterm Exam study guide W18

Course

Emerging Markets Issues (ECO 349)

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Students shared 6 documents in this course
Academic year: 2018/2019
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Grand Valley State University

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ECO349 - Study Guide for Midterm Exam Winter 2018, GVSU Wei Sun

Topic 1. What is Development and Development Economics? 1. What is development economics? How is it different from traditional economics and political economics? 2. What does “development” mean? What are the old view, intermediate view, and new view of development?

Topic 2. Comparative Economic Development 1. Use the “Rule of 72”. 2. Quantitative comparison of real GDP per capita between countries. Define and calculate “market exchange rate” given price information in two countries. a) Given output and price in each country, calculate real GDP per capita. b) Convert GDP per capita that is denominated in one currency into that of another currency using the “market exchange rate” and compare across countries. c) What is the potential problem of using the market exchange rate to convert real GDP per capita when comparing between a developed and a developing country? d) Define and calculate “purchasing power parity exchange rate” given a typical consumption basket and information of prices. e) Convert real GDP per capita that is denominated in one currency into that of another currency using the “purchasing power parity exchange rate” and compare across countries. Has the PPP conversion factor fixed the issue in d)? 3. Human Development Index of UNDP (formula will be provided in exam) What are the three components? How to calculate each component? How to construct the HDI from the components? How to interpret HDI?

Topic 3. Growth theories and Solow Growth model 1. Know the three growth theories: classical theory, neoclassical theory, and new growth theory. Know their propositions. Know the role of technological change in each theory. Know the role of population growth in each theory. Know whether growth or prosperity may last in each theory. 2. Know the Solow model assumptions (Y = F(K, L), constant returns to scale, diminishing returns to capital and diminishing returns to labor.) 3. Draw a graph of the Solow model showing that per-worker output is a function of the per-worker capital, investment, and depreciation of capital. 4. Know the change in capital equation (in the per-worker level), that is, investment increases capital and depreciation decreases it. 5. Identify the steady state equilibrium of the Solow model on the graph. 6. Know how to calculate the steady state level of output and steady state level of capital in a numerical problem. 7. Know the effects to steady state when 1) investment rate changes; 2) depreciation rate changes; and 3) technology changes

  1. Know the effects of population growth to the steady state level of output and capital and its implication to economic growth.
  2. Know the implications of Solow growth model to economic growth

Study Materials: All lecture notes in class, all homework assignments and their answer keys, all practice questions in and outside class and their answers.

Exam format: total 75 points, 75 minutes. You will have multiple choice, short answer, and problem solving questions.

Policy: You can use calculator, but cell phones are prohibited. Some formula will be provided to you during the exam.

If you have any questions, please visit me during my office hours!!!

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ECO349 Midterm Exam study guide W18

Course: Emerging Markets Issues (ECO 349)

6 Documents
Students shared 6 documents in this course

University: Grand Valley State University

Was this document helpful?
ECO349 - Study Guide for Midterm Exam
Winter 2018, GVSU
Wei Sun
Topic 1. What is Development and Development Economics?
1. What is development economics? How is it different from traditional economics and
political economics?
2. What does “development” mean? What are the old view, intermediate view, and new
view of development?
Topic 2. Comparative Economic Development
1. Use the “Rule of 72”.
2. Quantitative comparison of real GDP per capita between countries.
Define and calculate “market exchange rate” given price information in two countries.
a) Given output and price in each country, calculate real GDP per capita.
b) Convert GDP per capita that is denominated in one currency into that of another currency
using the “market exchange rate” and compare across countries.
c) What is the potential problem of using the market exchange rate to convert real GDP per
capita when comparing between a developed and a developing country?
d) Define and calculate “purchasing power parity exchange rate” given a typical
consumption basket and information of prices.
e) Convert real GDP per capita that is denominated in one currency into that of another
currency using the “purchasing power parity exchange rate” and compare across
countries. Has the PPP conversion factor fixed the issue in d)?
3. Human Development Index of UNDP (formula will be provided in exam) What are
the three components? How to calculate each component? How to construct the HDI
from the components? How to interpret HDI?
Topic 3. Growth theories and Solow Growth model
1. Know the three growth theories: classical theory, neoclassical theory, and new growth
theory. Know their propositions. Know the role of technological change in each theory.
Know the role of population growth in each theory. Know whether growth or prosperity
may last in each theory.
2. Know the Solow model assumptions (Y = F(K, L), constant returns to scale, diminishing
returns to capital and diminishing returns to labor.)
3. Draw a graph of the Solow model showing that per-worker output is a function of the
per-worker capital, investment, and depreciation of capital.
4. Know the change in capital equation (in the per-worker level), that is, investment
increases capital and depreciation decreases it.
5. Identify the steady state equilibrium of the Solow model on the graph.
6. Know how to calculate the steady state level of output and steady state level of capital in
a numerical problem.
7. Know the effects to steady state when 1) investment rate changes; 2) depreciation rate
changes; and 3) technology changes

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