ECN115BY Study 1 PDF

1. Overview a. Know the definition of a Malthusian trap population growth conneited the max level of to birth d death rates population sustainable is determined b. ratio the amount of by What is the Harrod-Domar model? resources in a given place available econ growth e investment in cap...

1. Overview a. Know the definition of a Malthusian trap population growth conneited the max level of to birth d death rates population sustainable is determined b. ratio the amount of by What is the Harrod-Domar model? resources in a given place available econ growth e investment in capital investment financing app gap i borrow ideal ratio current ratio to get more capital unto FC 0 i. Why did the concept of the “financing gap” fail to guide developing economies properly? marginal return to capital 1 diminishing 2 not meant for d ing countries to reach desired ratio c. Be able to describe the Solow Model in words? econ growth investment so when d ing bomeved i crippled by debt in capital technology i. Why is capital unimportant in the long-run but possibly important in the short run? in Long run already have optimal levelofcapital accumulating more is wasteful so d. What is the key to long-run growth in the Solow Model? tethnology capital e. Has the application of the Solow model to developing economies worked? no btc tech is easy to transfer d ing countries aren't devoid of capital f. What are the various ways that economic development has been quantified? GNI GDI corrected subjeltive GDP GDP measures synthetic measures of NTP for options happiness 2. How did we get here? a. How does the early development of food production and early arrival of domesticated animals set up a region to be a powerful dominator (one with guns, germs and steel)? sedentary pop grew faster bk less time in btwn births reliable food source specialization betterfood storage can raise animals weapons w surplus food early exposure to diseases tom animals dense living quarters meant developed immunity via natural selection b. Why have we seen a transition from hunting and gathering to food production? see Cal d also decline in meant hunting mammals gathering lifestyle after Pleistocene era not as c. What are the characteristics special to a crop? (enhanced wild plants) 1 robust a can Survive harsh climates 4 genetically 3 bear traits homogenous delicious d. What is the domestication process for a plant? good e. What crops were domesticated first? 8000 Be wheat grains 4000 Be fruits hate fruit trees that 500 B peas barley beets oats require grafting rye f. What are the characteristics of an animal that make it possible to domesticate? diet omnivores herbivores temperament breeding mild a calm captive breeding social structure growth grows quickly Ok ok in groups a al a leader g. What are the big five domesticated animals? Know that they have been the same ones for thousands of years. Camels Cows goat sheep Donkey horses h. How does domestication of animals earn more calories than hunting? food production less chance is prerequisite variation than hunting gathering i. What is the role of disease in empowering a region? see Ca j. What are the main differences in sedentary and hunter/gatherer lifestyles? see la k. What was the advantage of having “specialists” (or specialization) in your civilization? see a l. What makes the Fertile Crescent a unique birth place of food production? lots of terrains climate topography lotsof biodiversity access to water m. What is special about the axis of Eurasia? Why did it turn out to put Eurasia in such an advantageous place? East West orientation same amount same climate pop growth of daylight in a day spread easier ble needed less time to adjust n. What was special about “Britain” that made it important for the industrial revolution? by water had lots of coal surrounded had lots of close to rivers internally other countries so lots oftech advancement o. What are some of the social changes present in the transition to an industrialized society? farming social manufacturing structure women other minority groups often empowered to lower more specialization education birth rates gain healthcare better access employment delayed marriages p. What was the process of the spread of industrialization? q. What were the consequences of WWI on the various centers of power in the world? D destabilization of 2 Russian Czarist regime financial instability in Europe a USA r. Know what the first, second and third world were and their attitudes toward the global community. 1st capitalism to 2nd Socialism open trade central planning 3rd autarky s. What are the main reasons that countries fail to grow? geography social cultural structure geopolitics gov't demographic fiscal trap poverty talk trap of innovation 3. Absolute and Comparative Advantage a. Know the assumptions of the Absolute Advantage and Ricardo’s Comparative Advantage models. have labor countries tech absolute adv can simply make more goods as long as opportunity costs differ trade is beneficial some countries lower op cost comparative adv complete specialization b. Why, according to these models, is trade a good thing? allows for consumption off PPF c. Be able to recognize who has absolute advantage and comparative advantage in a numerical, two-country example. cheese 1000rad 1000 wine ca I cheese Iwine 100 cheese CB f I wine cheese d. How does this model of comparative advantage apply to Developing countries in general? bad ble it an promotes economy complete specialization leaves susceptible to demand swings or production issues e. What would this model of comparative advantage advise a developing country to do, why? (Would we imagine that they would completely specialize in one good or another?) complete specialization in good the have that you CA 4. Heckscher-Ohlin Model of International Trade a. Know the assumptions of the H-O model. have capital countries tech in some goods bei results much of country labor cheaper has partially specialize how conty A make more laser inane B manufacturing Iggy Big to produce ble of that the price ratio favors b. Why, according to this model, is trade a good thing? (Don’t forget to mention that factor prices tend to equalize) county to that can make gods cost he impaty producers county down labor demand wage I in wages in expating expensive labor intensive goods will exit the mkt drive importing of will export cheaply countries where labor intensive goods are inefficient high in labor intensive but I labor supply stays sane county wages in importing county c. Be able to identify, in general, which country will specialize in which good in a two country, two good example. A county E A contyn 30 a O d. Be able to graph the production possibilities frontier of a country in autarky and then with trade. M M ing led 1 NTI graphs 2 A 31 B 4 production under production under autarky trade a C consumption under trade e. How does this model apply to developing countries in general? Would we imagine that they would completely specialize in one good or another? partially robust specialize economy intentionality behind what you're producing f. What are the differences between the model of comparative advantage and the Heckscher-Ohlin model in terms of the impact of opening a developing country to international trade relationships? HO leads to more robust economies w partial specialization also encourages countries to analyze their strengths by looking factors endemic to country of production 5. Alternative Assumptions a. Know the various disadvantages of specializing in agricultural goods (commodities, consumption goods) and how this form of specialization can lead to very slow or stagnant economic growth. PS is Engel's law mechanism hypothesis which say demand for basic commodities don't increase as much as luxurygoods income irises when slow growth demand of mercy mercy richer countries whose of will production swings require less of commodity tech for their production b. Know the various disadvantages of specializing in high value commodities. Be able to explain Dutch Disease and the Rentier State. is often Dutch disease commodities a result where t due to county's currency all other goods of specializing now business in increased w other industries cheaper currencies will exitmarket which shifts demand for labor to left unemployment prices of people more goods benefitting demand relatively more expensive compared to other countries many in high value increase d services domestically t ble from high value commodity spending 6. Government involvement in trade a. Understand and be prepared to discuss the definition of the Import Substitution Strategy. grow GDP by limiting spent on imports w end goal to produce goods previously imported in general produce more manufactured gods emailing high tariffs do so by manipulate currency to help infant industries other countries more cheaply buy inputs from heavily subsidize infant industries but otter for extended periods which distorts incentive so firms aren't motivated to be more inefficient b. Understand and be prepared to discuss the definition of the Export Promotion Strategy. countries by making a god that by expanding exports to more is in demand globally ANI your country can produce efficiently grow GDP do so by fatter analyzing country's produce goods efficiently that subsidize infant a global market is in demandglobally t can produce of production companies but only temporarily c. What are the main differences between the two strategies? S protectionism distorts prices a currency focused on domestic demand a tariffs P subsidies last very long time no price or currency distortion forused on global market demand aid to selected industries temporary d. What are some countries that have tried the above strategies? Is EP Argentina Nigeria Taiwan India Brazil e. What are some problems that arise with import substitution? IS protetionism lasted very long time inefficient producers stayed in market due to distorted prices tamency consumers faced higher prices go't incurred other industries lots of debt suffered due to overvalued currency f. Know the conditions under which export promotion will work well or will fail. understand county's falters of endowment can forelast demand well global effective institutions 7. Weiner a. Be comfortable discussion Weiner’s view of happiness. How it is measured, the problems with establishing sustained happiness.