Harrod-Domar Model

Choose any 4 of 6 (@6 points each=24 points)

1. Why are the prices of nontradable goods generally lower in Developing Countries than in developed ones? Is the Purchasing Power Parity exchange rate for a Developing Country typically weaker or stronger against the U.S. dollar than the market exchange rate?

Don't use plagiarized sources. Get Your Custom Essay on
Harrod-Domar Model
Just from $13/Page
Order Essay

2. Why did economists once expect countries to converge in living standards? What has been happening in reality over the years?

3. What two factors determine the growth of output in the Harrod-Domar model? Why does it not have a steady state?

4. In what sense is the Lewis model in perpetual motion (i.e., why does it not have a steady state)? Provide an example of why its assumptions may not be realistic in a Developing Country.

5. What factors determine the steady state in the Solow model? What happens to the steady state output per worker if a natural disaster strikes causing depreciation to rise radically?

6. For a household to be poor according to the Multidimensional Poverty Index, what two things have to be true? Provide an example of an MPI indicator that may not be representative of true deprivation.

Required 2 (@5 points each=10 points)

7. Why does Amartya Sen in Development as Freedom say that a country that is democratic and enjoys a free press will never experience famine? Why do famines seem to occur under regimes that are alienated from the affected populations?

8. According to the late Hans Rosling (in the video), why is the “divided world” that existed in 1970 disappearing? According to him, is it better to become healthy first or wealthy first? How does he demonstrate his point?