Review Questions/Topics

Second midterm

  1. Explain the main implications of the Solow model.
  2. Explain the main implications of Endogenous Growth Theory.
  3. What are the different assumption in the Solow and Endogenous Growth models? How do they affect the main implications?
  4. What does increasing returns to scale mean? Constant? Decreasing? Can you give an intuitive "story" to explain these?
  5. What are complementarities? What are some examples given in T&S?
  6. What is a coordination failure? What are some examples given in T&S?
  7. What does a coordination failure mean about "free market" economics in a developing country?
  8. Using the Pakistan "closed economy" example of a coordination failure (2/9 class), how could government solve this problem? Please give a specific policy solution.
  9. What does Student Centered Teaching/Learning mean? How about Teacher Centered?
  10. What is the definition of the "Big Push" (see T&S glossary)? When is it needed?
  11. What does the statement "the firm can't capture all the (external) benefits from entering the market" mean? What is the definition of an "externality"?
  12. What is a Super Entrepreneur? How could a SE solve a coordination problem? What are the problems with implementing the SE idea? Who likes the SE idea more: socialists or capitalists?
  13. Read Box 4.1 (p. 152 T&S). Draw two diagrams: one before gov't intervention, and one for the post-intervention period. If the gov't stopped intervening, would Ecuador return to the old equilibrium (of being late)?
  14. What does globalization mean? What comes to your mind when you hear the word?
  15. According to some economists, trade is "good" because it gives people more options. Can you sum up this argument in your own words?
  16. What does the term (low) income elasticity of demand mean? How does it relate to developing countries' trade experience?
  17. What does the term (low) price elasticity of demand mean? How does this term fit into the concept of export earnings instability?
  18. What does "terms of trade" mean? What does it mean to say the "the terms of trade have deteriorated in primary products"?
  19. What is the Prebisch-Singer hypothesis?
  20. What does absolue advantage mean? What does comparative advantage mean? What's the difference?
  21. What are the implications from the H-O model? What should any country do to be better off?  How does trade benefit countries?  Who does it benefit?
  22. What are some criticisms of the traditional free-trade theory assumptions?

note: this is NOT a sample exam nor is this an exhaustive list of all the potential questions that might be on the exam. It is only meant to help guide your studying.