Development Economics

Problem Set 1
Sherif Khalifa

1. (a) What is the usual indicator of living standards?
   (b) How is this indicator of living standards calculated ?
   (c) What are the problems with this indicator?
2. Consider a country whose national income is $750 Million and whose population is 12.5
   million. Assume in this country that the rich are 20% of the population and own 85% of the
   nationís income.
   (a) The income per capita of the nation =
   (b) The income per capita of the rich =
   (c) The income per capita of the poor =
   (d) If the total income of the rich increases by 50%, the new nationís income =
   (e) If the total income of the rich increases by 50%, the new nationís income per capita =
   (f) The growth rate of the nationís income per capita =
   (g) Can we conclude that the living standards have improved in this country? Why?
   1
3. Assume the growth rate of income is 10% and the growth rate of population is 5.83%?
   (a) The doubling time of income =
   (b) The doubling time of population =
   (c) The doubling time of income per capita =
4. Consider the following information about a developing country:
   Income per capita $1037
   Life expectancy 43 years
   Adult literacy 53%
   Gross enrollment 46%
   (a) Income index =
   (b) Life Expectancy index =
   (c) Education index =
   (d) Human Development index =