BHWK
Test 1 Concept Review Guide
Below I’ve listed concepts, measures, and models that we’ve covered that are fair game for Test 1. For concepts and measures you should be able to define them, calculate them, interpret what they tell you (and understand what they don’t tell you), compare them, and critique them. Our models have been the Solow model and the conceptual model of Acemoglu and Robinson. We’ve covered lots of concepts and measures. You should be able to work with and interpret various models and conceptual frameworks (e.g., Sen) we’ve covered.
You can count on something related to poverty/inequality and something with the Solow model being on the exam. There will be other things on there too, but these two will play a substantial role.
The exam will be open book and open note, though you will not be allowed to discuss the exam with any other person.
Have a calculator. I’m sure there will be calculation of some sort!
Study by doing all worksheets (there are answer keys for most on Sakai), explaining concepts and reasoning of any analysis, understanding concept or measure definitions well enough to apply them or compare and contrast them…explaining them and redoing the worksheets and homeworks helps with this. Use your notes, readings, and PPT slides from class as references as you study.
We’ve covered a fair bit so far this term! Here’s a rundown:
Development
Economic Development
Economic Growth
Aggregate income = aggregate expenditure = aggregate output
Calculating GDP, final goods approach, value added approach
GDP per capita
Purchasing power parity GDP, PPP GNI
Market exchange rate
PPP exchange rate, PPP basket
Tradeable vs non-tradeable goods
Index formula, using and interpreting it, index vs plain old ranking of a variable, how to interpret index value with different ways of establishing the max value and min value used in the index formula, issue of weights given to different index components
HDI, what is it, what are its components, pros and cons of using it as a measure of development
Sen’s development as freedom, functionings, capabilities, agency (freedom to choose)
Sen’s effectiveness and evaluative reasons for focusing on freedoms
Why GDP (or GNP or GNI) does not measure wellbeing
Why GDP (or GNP or GNI) does not actually measure final output (or aggregate income) completely accurately
Formal and informal production
Poverty line
Income vs Consumption(Expenditure)
PPP poverty line
Absolute poverty
Relative poverty
FGT poverty index, using and interpreting it with different α values
Poverty rate (also known as the poverty headcount index)
Inequality
Income distribution, quintiles
Gini index
Lorenz curves
What affects whether an income source increases, decreases, or doesn’t change income inequality
Poverty an economic growth, why people can disagree about whether poverty is decreasing if there is econ growth
Poverty rate vs Absolute number of people in poverty….reason why people disagree about how poverty is changing
Dynamics of poverty….and how this relates to people arguing if poverty is increasing or decreasing
Recursion function, wealth dynamics with the recursion function, stable and unstable equilibrium
Poverty trap, escaping a poverty trap
Sen’s Capability Poverty
How to measure capability poverty, issues
Multidimensional poverty index
Aggregate production function
Labor
Physical capital
Human capital
Diminishing marginal returns (also called diminishing marginal productivity)
Returns to Scale, constant returns to scale
Production function
Solow model, graph, equations, dynamics, steady state, what model predicts if s, d, n, K have exogenous changes.
Transitory vs. long run economic growth
What causes long run growth for Solow
Convergence
Technology increase
Solow Sources of Growth equation, calculation with, interpreting results from it
Total Factor Productivity
Proximate vs. Fundamental causes of economic growth
Geography
Institutions
Economic institutions
Political Institutions
Infrastructure
Inclusive political institutions, pluralism, centralized
Extractive political institutions
Inclusive economic institutions, Rule of law, Property rights, Enforcement of contracts..info on PPT slides
Extractive economic institutions
Creative destruction
de jure and de facto political power
Acemoglu and Robinson conceptual model for institutional cause of long run economic growth
Acemoglu and Robinson explanation for why long run economic growth is hampered by extractive economic and political institutions
Structural Change..4 basic structural changes that occur when economic growth happens over a long period of time
Sectors of the economy (categorizing production/income generation in the economy; agriculture, industry, and service sectors.)