ECON 313 final exam

Question 1

define GDP

Answer 1

• gross domestic product
• the market value of all goods and services produced within a country over a given period of time

Question 2

GNP

Answer 2

• gross national product
• the market value of all goods and services produced by all permanent residents within a country over a give period of time

Question 3

human development index (HDI)

Answer 3

• a multidimensional index used to measure economic development
• comprise of a weighted average of income, health, and education
• better than GNI because it considers more aspects such as education

Question 4

PPP

Answer 4

• purchasing power parity
• entails computing exchange rates between different countries’ currencies so that the same basket of goods in one country has the same dollar value in all countries

Question 5

big mac index

Answer 5

• an index that illustrates purchasing power parity across countries, using a single homogenous good such as hamburgers or a haircut

Question 6

headcount index (H)

Answer 6

• the proportion of individuals living under the poverty line
• easiest and most common measure of poverty
• describes the extent of poverty; how widespread it is
• formula : H = Q/N
  ◦ where Q is the number of people under the poverty line
  ◦ where N is the population

Question 7

poverty gap

Answer 7

• measures the extent to which individuals fall below the poverty line as a proportion of the poverty line
• the sum of these poverty gaps give the minimum cost of eliminating poverty, if transfers were perfectly targeted