Podcast
Questions and Answers
The Headcount Ratio (HCR) measures how many ______ are there.
The Headcount Ratio (HCR) measures how many ______ are there.
poor
The Depth of Poverty measures how ______ are the poor.
The Depth of Poverty measures how ______ are the poor.
poor
The Severity of Poverty highlights the income ______ among the poor.
The Severity of Poverty highlights the income ______ among the poor.
inequality
Low-income countries have a GNI per capita of less than ______ US dollars.
Low-income countries have a GNI per capita of less than ______ US dollars.
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The formula for calculating GDP is GDP = C + I + G + (X - ______).
The formula for calculating GDP is GDP = C + I + G + (X - ______).
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The FGT Index is used to measure the ______ of poverty.
The FGT Index is used to measure the ______ of poverty.
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Without sufficient economic growth, raising the well-being of the ______ becomes socially costly.
Without sufficient economic growth, raising the well-being of the ______ becomes socially costly.
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Gross National Product (GNP) includes GDP plus net factor income from ______.
Gross National Product (GNP) includes GDP plus net factor income from ______.
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Labor-intensive growth is a preferred means of ______.
Labor-intensive growth is a preferred means of ______.
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Economic classifications by the World Bank include Low, Lower-middle, Upper-middle, and ______ economies.
Economic classifications by the World Bank include Low, Lower-middle, Upper-middle, and ______ economies.
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GDP or GNI per Capita is calculated by dividing GDP or GNI by the country's ______.
GDP or GNI per Capita is calculated by dividing GDP or GNI by the country's ______.
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Growth in GDPPc / GNIPc is a good measure of average income progress over ______.
Growth in GDPPc / GNIPc is a good measure of average income progress over ______.
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The formula to calculate growth rates between two periods is g = 100[(yT1/y0) - ______].
The formula to calculate growth rates between two periods is g = 100[(yT1/y0) - ______].
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Nominal GDP refers to raw GDP value based on current ______.
Nominal GDP refers to raw GDP value based on current ______.
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Real GDP takes ______ into account when calculating GDP value.
Real GDP takes ______ into account when calculating GDP value.
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The Consumer Price Index (CPI) is sometimes called the GDP ______.
The Consumer Price Index (CPI) is sometimes called the GDP ______.
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Comparing incomes across countries using official exchange rates involves calculating GDPPc$ as GDPPcLocalCurrency/______.
Comparing incomes across countries using official exchange rates involves calculating GDPPc$ as GDPPcLocalCurrency/______.
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Purchasing Power Parity (PPP) provides more accurate comparisons of living ______.
Purchasing Power Parity (PPP) provides more accurate comparisons of living ______.
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CPI is often based on a base-year that equates prices to ______ or 1.
CPI is often based on a base-year that equates prices to ______ or 1.
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The formula for calculating Real GDP involves nominal GDP divided by ______.
The formula for calculating Real GDP involves nominal GDP divided by ______.
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Study Notes
Monetary-Based Measures of Poverty
- Headcount Ratio (HCR) measures the percentage of a population below the poverty line, indicating how many people are classified as poor.
- Depth of Poverty, also known as Poverty Gap Ratio (α = 1), assesses the average distance of the poor from the poverty line, indicating how poor the poor are.
- Severity of Poverty or Squared Poverty Gap (α = 2) captures income inequality among the poor, emphasizing larger gaps between the poorest and others.
Poverty Measurement Indices
- Foster, Greer, and Thorbecke (FGT) Index is used for comprehensive measurement of poverty incorporating HCR, depth, and severity.
- A higher α value in FGT indicates greater sensitivity to income inequality among the poor.
World Bank Income Classifications (GNI per capita PPP)
- Low Income: less than US$ 1,046
- Lower-middle Income: US$ 1,046 to US$ 4,095
- Upper-middle Income: US$ 4,095 to US$ 12,695
- High Income: greater than US$ 12,695
Economic Growth and Well-being
- Economic growth is linked to employment opportunities which are crucial to improving overall well-being.
- Insufficient economic growth necessitates taxing and redistributing wealth, which can be socially costly.
- Redistributive growth efforts should focus on labor-intensive and agricultural growth for better impact.
Gross Domestic Product (GDP) and GNP
- GDP represents the total value added by all firms in a country.
- GNP (Gross National Product) includes GDP plus net income from abroad, such as repatriated profits and migrant remittances.
Components of GDP
- The GDP formula is expressed as: GDP = C + I + G + (X – M)
- C: Consumption by households
- I: Investments by businesses
- G: Government spending
- X: Exports
- M: Imports
GDP Per Capita
- GDP or GNI per capita measures economic output divided by the population, reflecting average income progress.
Growth Rate Calculation
- Growth rate formula:
- g = 100[(yₜ₁/y₀) - 1]*
- Percent change over two years can be calculated as:
- % Change = (yₜ - y₀) / y₀*
Nominal vs. Real GDP
- Nominal GDP is measured at prevailing prices, while Real GDP adjusts for inflation, using constant prices from a base year.
Consumer Price Index (CPI)
- CPI serves as a GDP deflator, indicating price level changes over time and aiding in the adjustment of nominal GDP to account for inflation.
- A base year is typically chosen with prices indexed to 100 for accurate comparisons.
International Income Comparisons
- Official exchange rates can distort income comparisons across countries.
- Purchasing Power Parity (PPP) uses unified international prices for better living standard comparisons, providing a more accurate GNI assessment.
- PPP-adjusted GDP per capita: GDPPc$= GDPPcLocalCurrency/PPP exchange rate
Data Sources for Economic Measurement
- Data for GDP, GNI, and other economic indicators can be sourced from organizations like PSA (Philippine Statistics Authority) and World Bank (WB).
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Description
This quiz explores various monetary-based measures of poverty, including the Headcount Ratio (HCR), Depth of Poverty, and the Foster, Greer, and Thorbecke (FGT) Index. Learn how these methods evaluate the extent and severity of poverty within populations. Test your understanding of these important concepts in poverty measurement.
