BED2084 Tutorial 03

The absolute poverty line

• decreases as real income grows.

• shows the average income of the lowest income group.

• can be measured with the Lorenz curve.

• none of the above.

The Gini coefficient provides a measure of

• the level of poverty.

• the level of relative inequality.

• disguised unemployment.

• the rate of growth.

Kuznets’ inverted-U hypothesis

• implies that things must get worse before they get better.

• suggests that inequality will worsen and then improve as a country grows.

• suggests that inequality will improve and then worsen as a country grows.

• points out six characteristics of modern economic growth.

According to Kuznets, in the process of development inequality in an economy will normally

• first rise and then fall.

• first fall and then rise.

• remain about the same.

• show no definite pattern.

Poverty is better studied with size distribution measures than those based on factor distribution because

• labor income may be highly concentrated in well-paid modern sector workers.

• some poor farmers may receive a sizable share of income in rent.

• income from nonmarket activities such as foraging may be important.

• all of the above.

With modern sector enrichment growth, inequality will

• first rise and then fall.

• first fall and then rise.

• remain about the same.

• none of the above.

With modern sector enlargement growth, inequality will

• first rise and then fall.

• first fall and then rise.

• remain about the same.

• all of the above.

Higher income countries tend to have lower levels of absolute poverty because

• more employment opportunities

• more public assistance

• greater entrepreneurship opportunities.

• all of the above.

One of the characteristics of the poor is that they are

• more likely to be employed in the modern industrial sector.

• more likely to come from small families.

• more likely to be well educated.

• more likely to live in a rural area.

Which of the following policies might increase labor intensity in industry?

• a decline in the cost of credit

• a decline in the minimum wage rate

• a decline in the elasticity of substitution

• all of the above.