ECO2117 - Midterm Part 1

INSTRUCTIONS:

Please answer all questions.

For each question, you will need to support your answer, and you will need to abide by the
length restrictions. I will not penalize you if you go over by a little, but we will stop reading at
the specified length if you write too much.

This exam is for a total of 30 marks.

This exam is an open book exam, so you can use your notes and all the material you have
prepared for your homework submissions.

All the answers should be typed, and graphs or any other illustration (if needed) can be added
as a picture to your word document.

FORMAT:

Format for submission should be in pdf.

Font: Times New Roman

Margins: 2.54cm top/bottom/left/right.

TIME (I will be VERY strict on it)

Reading the exam: 10 min.

Exam Duration: 2 hours
Extra time: 30 min includes reviewing- pasting graphs if needed – converting documents, etc.
1- Poverty is defined as lack of Income only? True or false? Explain. [2 marks]
Approximate length: 6 lines
Multidimensional Poverty: Exercise
2- Using the following table compute M1. Show your steps. No steps no Marks. [2 marks]
i/j 1 2 3 4 5 6 7 8 9 10

E1 0 0 0 1 1 0 0 1 0 1
E2 0 0 0 0 1 0 1 0 0 0

H1 0 0 1 1 1 0 0 0 0 0

H2 1 0 0 0 0 0 1 0 1 0

L1 0 1 1 1 0 1 0 1 0 0

L2 0 0 1 0 1 0 0 1 0 1

L3 0 1 1 0 0 1 0 1 1 0

L4 0 0 0 0 1 0 0 0 1 0

L5 1 1 1 0 0 0 1 1 1 0

L6 0 1 0 0 0 1 0 1 0 0

3- We know that contribution of sector 1 to total GDP is 15 billion dollars and that its relative
contribution is 30% of total production. We also know that for sector 2, the relative
contribution is 25%. Using this information, determine what would be sector 2 contribution
and sector 3 contribution as well as sector 3 relative contribution to total production. What is
the most dominant sector? Explain your steps and answer. [2 marks]

4- If a mother deprives herself of food to feed her child and her body mass index decreases below
18.5, would this be captured in the MPI? Explain [2 marks]
Approximate length: 3 lines

5- Based on the evidence from the following table, do you think the information provided in this
table is coherent? Explain. Note that “Tshs” is the currency in Tanzania expressed in 2001
prices.
[2 marks].
Approximate length: 3 lines
 [Tanzania mainland, 2001 2007 % change
2001 prices]

Real GDP, bn Tshs 8,515 12,875 51.2

GDP/capita/month, 18,965 25,795 29.9

Tshs
Household 8,897 9,109 2.4
consumption (from
Household Budget
Survey)/cap/mth,
Tshs
Headcount poverty 35.7 33.4
rate (national
definition)

6- The availability of disaggregated data can help policymakers decrease inequalities. True or
false. Explain. [2 marks]
Approximate length: 3 lines

7- Based the reading on child stunting and economic growth:

a. Evaluate whether the following statement is true or false and explain why.

Interventions designed under assumption that economic growth translates into improved
child well-being (stunting) are highly effective. [2 marks]
Approximate length: 3 lines

b. Evaluate whether the following statement is true or false and explain why?

Stunting is a critical issue that must be addressed, but its impacts are limited on the
children’s physical health and have no consequences on their life course. [2 marks]
Approximate length: 3 lines
8- Compare income inequalities between China and the Philippines using the information
provided (both in the graph and table). Be very specific about what information you are using
to make the comparison and explain why. [3 marks]

Country Gini
China 42.1
Philippines 43
South Africa 63
Bangladesh 32
Pakistan 30

Approximate length: 3 lines

9- Among the properties of the inequality indices, we have seen the Pigou Dalton principle. Do
you think that Kuznets Ratios have this property? Explain. [2 marks]
Approximate length: 4 lines

10- Thinking of the Occupy Wall Street movement, what are the parts of the distributions
compared? Do you think we could use a Gini to convey the same idea? Explain [2 marks]
Approximate length: 2 lines

Maria and Khuzdar are two students who happen to live in HAHA town, and they are not
friends with each other. Maria and her friends are attending an all-girls school where all
students are receiving a school lunch for free as part of a nutrition program designed by
ECO2117 students (The objective of this program is to improve students’ nutrition). Khuzdar
and his friends attend an all-boys school where there are no free lunches provided; however,
the school is also part of the nutrition program evaluation experiment.

a. Using the information provided above, explain whether (or not) ECO2117 students
should worry about attrition resulting from the design of their nutrition program (hint:
start by defining attrition). [1 marks]
Approximate length: 5 lines

b. One of your friends learns about the free school lunch program and suggests to you that
it is better to provide some of the students in Khuzdar’s school with free lunch using a
lottery. Do you agree with this suggestion? Explain. [1 marks]
Approximate length: 4 lines