ECON311 Final: Notes from Midterms_Practice Questions
21 Dec 2018
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Life expectancy positively and linearly related to gdp per capita. More health associated with given increase in gdp per capita. Convergence in life expectancy between high income and developing countries. Agriculture: produces greater proportion of gdp in low income economies than middle income economies. Purchasing power parity method: exchange rates determined largely by flow of traded goods and international capital. Generally do not reflect relative prices of non-traded goods. Current market prices of produce will overstate per unit value of non-marketed production if demand curves are negatively sloping and supply curves are positively sloping. Underground (or shadow or informal) economy: market transactions that are not reported. Relatively larger in countries with higher taxes, heavier regulation, weaker law enforcement. Cash demand method: based on assumption cash is used to make transactions. Informal firms: higher costs, more difficult/less desirable to grow, do not pay taxes, lower access to public services, low productivity.
