Econ241 global issue answer the question

Download the spreadsheet WDR 2014 Key Indicator Summary in Week 1.

1) Explain the World Bank’s classification scheme of ranking countries according to their per capita income.

What are the definitions/income ranges for low, lower middle, upper middle and high income nations?

What are the pros and cons of this type of ranking?

2) Describe the distribution of the world’s income between low, middle and high income nations for 2013. Provide data for both shares of income and population for each income group.

3) Follow this link (Ctrl Click). You should see the World View Table 1.1 World Development Indicators. You can also find this link in Week 1 Course Documents in WDR – Development Indicators file or cut and paste the following: http://wdi.worldbank.org/table/1.1#

Identify and provide the per capita income (Atlas Method) for one country in each of the World Bank Income categories.

Low Income
Lower Middle Income
Upper Middle Income
High Income

4) What other dimensions of standard of living other than per capita income (or other monetay measure) can be used to differentiate poor from rich nations?

5) Follow this link https://www.cia.gov/library/publications/the-world-factbook/fields/2048.html. Provide the labor force participation rates for the countries you selected in question three.

Are these rates what you would expect given each country’s per capita income?

6) During the Medevial Period, what two institutions controlled most aspects of decisionmaking? Why would this system not lead to economic development?

7) How did the Enlightenment set the foundation for the first Industrial Revolution?

8) What political and economic mistakes were made following WWI and the Great Depression that contributed to the rise of Nazi Germany and the onset of WWII?

Which Bretton Woods Institutions created after WWII are responsible for not making the same mistakes again?

9) Describe China’s evolution in the Post WWII era. Start with the Communist Revolution 1949. What important political change occurred in the late 1970s? How has this change led a reshaping of China since?

10) Why are rich countries rich and poor countries poor in the present era?

11) Define the economic concept of scarcity. How does scarcity lead to having to make choices? What is the cost of make a choice?

12) Using a marginal benefit and marginal cost framework, explain rational tradeoff decision making. What is the outcome of the decision making, and what is the underlying force that drives it?

13) The main tradeoff between market and command economies is efficiency versus equity. A larger government as a percentage of GDP would represent a greater preference for equity at the expense of efficiency. Use the spreadsheet in this module to describe where the US falls relative to other “rich” nations regarding this trade off. Do we favor efficiency over equity relative to European nations?

14) With regards to the Production Process model, what are the main causes of economic growth? Explain why society must sacrifice in present period in order to experience growth in the future.

15) Explain the meaning of a Production Possibilities Frontier’s slope. What economic concept does it measure? Use your answer to explain why a typical PPF bows outward

16)Explain comparative advantage

17) Which country has the absolute advantage producing beer? Sausage?

Beer:_______________________

Sausage:____________________

18) What is the opportunity cost of producing a barrel of beer (in terms of forgone sausage) in:

Germany: Italy:_________ _____ According to comparative advantage, who exports which good? Delete the other country.

Beer: ________Germany or Italy____ Sausage: _____ Germany or Italy______

19) If Germany is endowed with 1000 hours of labor what would the sausage and beer intercepts be if you drew a diagram of its PPF? What would be the PPF’s slope? Do the same for Italy with 800 hours of labor.

20) Using the monetized Ricardian model, what are three different ways a country could try to become competitive in the export of a good?

21) What is the basis for comparative advantage in the Factor Endowment Model? In other words, what is different between countries that allow them to gain from trade with each other?

22) Describe Mexico’s and Canada’s PPFs, assuming Mexico is labor abundant and Canada capital abundant and that Good Y is labor intensive and Good X is capital intensive. If you draw it, put good X on the horizontal axis and good Y on the vertical axis.

23) In autarky which country, Mexico or Canada, would the relative price of X be cheaper? Why?

24) According to the Factor Endowment model, with a terms of trade between their autarkic MRTs, countries will export which goods?

25) In the Factor Endowment model, owners of which inputs will see their income rise and which owners will see their income fall?