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There are three session, section C is very important please detail when you answer to it. Please make sure that the paper is NOT using any AI tool.
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Part A Indicate whether the given statement is true(T) or false(F).
1. Eradication of relative poverty is a part of the SDGs.
2. If one single person had the entire national income, the value of the Gini
coefficient ratio would be equal to 0.
3. The closer is the Lorenz curve to the 45-degree line, the more equal the
distribution of income.
4. The Lorenz curve can never lie above the 45-degree line.
5. If the government imposed a progressive income tax, then the value of the
Gini coefficient will become smaller.
6. Unlike Gini coefficient, the coefficient of variation is affected by the unit of
measurement.
7. If the area between the line of perfect income equality and the Lorenz curve
is A, and the area under the Lorenz curve is B, then the Gini coefficient is
A/(A+B).
8. Eradication of absolute poverty is achievable but it is not possible to eliminate
relative poverty.
9. Headcount index ratio satisfies both the scale independence principle and the
transfer principle (Pigou-Dalton Principle)
10. The higher is Kuznet’s ratio, the lower is the degree of inequality between
high-and low-come groups in a country.
11. Absolute poverty line is set based on purchasing power parity method that
considers local price level.
12.In general, the amount of Average Poverty Gap is bigger than the amount of
Average Income Shortfall.
13. Multidimensional Poverty Index(MPI) is computed as the sum of the
incidence of multidimensional poverty and its average intensity.
14. Multidimensional Poverty Index treats nutrition and drinking water with equal
weight
15. The Closer is Normalized Poverty Gap to 1.0, the less severe is the poverty
problem.
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Part B Choose the best answer to each question.
16. Estimated Gini coefficients from actual international data typically lie
between (
A ) for countries of highly unequal income distributions, and
for countries with relatively equal distributions, they lie between ( B )
(a) A= 0.50-0.70, B = 0.20-0.35
(b) A= 0.80-1.00, B = 0.50-0.70
(c) A= 0.20-0.35, B = 0.35-0.50
(d) A= 0.40-0.60, B = 0.60-0.80
17. Which of the following is false regarding measures of income distribution?
(a) Factor share distribution of income offers no information about how
income is distributed among individuals.
(b) Measures of size distribution of income, such as the Gini coefficient, is
not affected by the size of population.
(c) If Gini coefficient is 0.3, income distribution is considered highly unequal.
(d) For developing countries, income growth based on Ahluwalla-Chenery
welfare index will be generally lower than GNI growth rate.
18. What does the World Bank’s international poverty line aim to represent?
(a) The minimum income needed to sustain a family.
(b) The average income of the poorest 20% of the world’s population.
(c) The threshold below which one is considered unable to meet basic
needs.
(d) The income level at which one can afford basic healthcare and
education.
19. Which of the following properly explains the meaning of figures like $2.15,
$3.65, and $6.85 currently used by the World Bank for calculating poverty
rates?
(a) The daily income in dollars, calculated using the current prices of the
relevant year.
(b) The daily expenditure in dollars, adjusted for Purchasing Power Parity
(PPP) as of 2017.
(c) The daily income in dollars, assessed at the constant market prices of
2020.
(d) The daily expenditure in dollars, adjusted according to the Purchasing
Power Parity (PPP) of the relevant year.
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20. If Total Poverty Gap is $5,000, the number of persons whose income fall
below the poverty line is 200, and the size of population is 1,000, then what
is the Average Poverty Gap?
(a) $5
(b) $250
(c) $1 million
(d) $10
21. Which of the following can have a value greater than 1?
(a) HDI
(b) MPI
(c) Gini coefficient
(d) Palma ratio
22. Which of the following represents the formula for ‘Poverty gap at $2.15 a day
(2017 PPP) (%)’ as can be found in the World Bank’s World Development
Indicator database?
1 H
1 H
(a) (Y p − Yi ) Y p
(b) (Y p − Yi ) Y p 100
N
N i =1
i =1
1 H
(c) (Y p − Yi ) Y p 100
H
i =1
1 H
(d) (Y p − Yi ) 100
N i =1
Part C Briefly explain each of the following questions.
1. What is a Lorenz curve? Draw one, labeling the axes. Using your Lorenz
curve diagram, explain the method of calculating the Gini coefficient. Discuss
the theoretical range of the Gini coefficient and its significance in economic
analysis.
2. Discuss the differences and similarities between the Multidimensional
Poverty Index (MPI) and the Human Development Index (HDI) in terms of
their construction, underlying principles, and applications. Briefly explain their
respective dimensions and indicators, and how these uniquely contribute to
measuring and interpreting poverty and human development.
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