Exercises 2

A) Q1: Which data would you select if the task is to compare the relative income level of countries?

(a) GNI

(b) GNI per capita

(c) GDP growth

(d) Inflation

Q2: Why do we use GNI (or GDP) per capita numbers for comparing the development levels of countries?

(a) because it reflects how much the country as a whole produces.

(b) because it shows how much individuals live in the particular country

(c) because it reflects how much an individual earns

(d) because it shows how much wealth is possessed by individuals

Q3: What does the data “GNI, Atlas method” refer to (by clicking on the particular expression, you will see the definition)?

(a) GNI is the sum of value added by all resident producers plus any product taxes (less subsidies) not included in the valuation of output plus net receipts of primary income (compensation of employees and property income) from abroad.

(b) GNI is the sum of the wealth possessed by all resident consumers plus any product taxes (less subsidies) not included in the valuation of output plus net receipts of primary income (compensation of employees and property income) from abroad.

(c) GNI is the sum of the wealth possessed by all resident producers plus any product taxes (less subsidies) not included in the valuation of output plus net receipts of primary income (compensation of employees and property income) from abroad.

(d) GNI is the sum of value added by all foreign producers plus any product taxes (less subsidies) not included in the valuation of output plus net receipts of primary income (compensation of employees and property income) from abroad.

Q4: How much was the GNI per capita in China in 2005?

(a) 1,740

(b) 930

(c) 1.2 trillion

(d) 2.3 trillion

Q5: In which currency are the data given?

(a) Chinese juan

(b) Japanese yen

(c) Euro

(d) US dollar

Q6: According to the data on GNI per capita, is China a relatively rich or poor country? In order to provide the proper answer, you should compare the country to the data on world average. Please use the World Bank’s webpage again and select the term “World”.

(a) China is a relatively poor country since the world average is much above the Chinese data.

(Note: the world average GNI per capita was 7,011.1 US dollars in 2005.)

Q7: How much was the annual GDP growth rate in the world in 2005?

(c) 3.5%

Q8: As compared to the world average GDP growth rate, did Chine perform well or poorly in 2005?

(b) China provided a spectacular performance since its annual growth rate was much above than that of the world.

(Note: the Chinese annual GDP growth rate was 10.2% in 2005.)

Q9: Now check the data on GDP/GNI per capita and annual growth rate in another country, namely, Hungary.

How much was the GNI per capita in Hungary in 2005?

(c) 10,070

Q10: How much was the annual GDP growth rate in Hungary in 2005?

(d) 4.1%

Q11: According to the data, which country is richer: Hungary or China?

(d) Hungary

Q12: Select also Niger, Korea and Switzerland and check their GNI per capita data (in 2005). What is the correct order of their development (starting with the poorest one)?

(d) Niger, China, Hungary, Korea, USA, Switzerland

B

Q1: Can you recall what the first prediction of the neoclassical growth theory was?

(c) There is a convergence among nations since the relatively poor nations will grow at a faster pace than the rich nations.

Q2: Based on the data, can you see a real convergence among the nations?

(a) No, not really.

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