Question 1

Which of the following cost saving activities is referred to as ex post responses to fluctuations?

Accepted Answer

Taking out a loan to manage fluctuations in income or expenses is an ex post response, meaning it is a reaction after the fact to deal with financial variability. This involves borrowing money with the promise to repay it, along with interest, from future income.

Question 2

As income levels rise,per capita food expenditure tends to_________ while the percentage of total expenditure on food tends to ________.

Accepted Answer

When income levels rise, people have more disposable income to spend on non-food items such as transportation and entertainment. Therefore, the percentage of total expenditure on food tends to fall. However, as people become wealthier, they often choose to purchase higher quality and more expensive food items, causing the per capita food expenditure to rise.

Question 3

Typically,which of the following sectors has a much larger share of the labor force in developing countries compared to developed countries?

Accepted Answer

Developing countries often have a higher percentage of the labor force engaged in the agriculture and mining sector due to the predominance of these industries in their economies. Developed countries, on the other hand, have shifted towards service-based economies with a higher percentage of their workforce engaged in business and personal services.

Question 4

One of the issue facing households in developing countries is how they cope with fluctuations or shocks which can arise from all of the following except:

Accepted Answer

Fluctuations or shocks in household finances can arise from seasonal changes in weather, life cycle events such as marriage and old age, and market prices. Consumption smoothing is a strategy used by households to cope with these fluctuations, which involves spreading out consumption patterns over time to ensure a consistent level of consumption. Therefore, D is not a correct answer as it is actually a strategy that households use to cope with fluctuations.

Question 5

Basic foods are very important in the budgets of low income households.According to the study of Banerjee and Duflo (2007),it is common for the low income households to spend _____ of their total consumption budget on food.

Accepted Answer

According to the study of Banerjee and Duflo (2007), low income households typically spend 50% - 90% of their total consumption budget on food. Therefore, choice C is the best answer.

Question 6

An empirical pattern known as Engel's Law states that as income levels rise,per person food expenditure

Accepted Answer

Engel's Law states that as income increases, the absolute amount spent on food rises, but the proportion of income spent on food decreases.

Question 7

By the World Bank definition,with income per capita of $350,Malawi is classified as a ______.

Accepted Answer

According to the World Bank definition, a country with income per capita below $1,036 is classified as a Low Income Country. Malawi's income per capita of $350 falls below this threshold, hence it is classified as a Low Income Country.

Question 8

In studying the well-being,it is most common to focus on:

Accepted Answer

Well-being is typically measured at the individual or household level, as these are the units that experience well-being directly.

Question 9

By the World Bank definition,with income per capita of $8,890,Mexico is example of ______.

Accepted Answer

According to the World Bank's classification, countries with income per capita ranging from $4,046 to $12,535 are considered upper middle income countries. Since Mexico's income per capita is $8,890, it falls under this category. Therefore, the correct answer is C) Upper Middle Income Country.

Question 10

Households in developing countries face lots of fluctuations and shocks.Seasonal fluctuations in agriculture means that in off-seasons farmers tend to demand less labor and supply less food which _________ wages and __________ food prices.

Accepted Answer

The sentence implies that when farmers demand less labor and supply less food, it leads to a decrease in wages and an increase in food prices. Therefore, the choice that correctly fills the blanks is "reduces" and "increases", which is option D.

Question 11

What is the normal interest rate charged on a howlats loan?

Accepted Answer

The normal interest rate charged on a howlats loan is 0%, as howlats loans are a fictional concept and typically in such contexts, a 0% interest rate is implied to indicate no cost for borrowing.

Question 12

In countries like Gambia,seasonal fluctuations are so profound that the last few months before the new harvest are called the:

Accepted Answer

The phrase "hungry season" implies that people are experiencing hunger during this period of time, which is supported by the description of the seasonal fluctuations in Gambia. Therefore, the best choice is B. Choice A, "dead season," does not convey the same level of hardship and hunger. Choice C, "famished season," is similar in meaning to "hungry season," but is less commonly used. Choice D, "starving season," also implies extreme hunger, but it is not as commonly used as "hungry season."

Question 13

Among these four countries,one would expect that the percentage of workers who are self employed,employers and family workers is:

Accepted Answer

Malawi, being a predominantly agricultural and less industrialized country, tends to have a higher percentage of self-employed, employers, and family workers compared to more industrialized and service-oriented economies like the United States, Mexico, and even Indonesia. In such economies, informal employment and small-scale farming or businesses play a significant role, leading to higher self-employment and family work rates.

Question 14

To identify the features of life circumstances that matter to developing country households,and then to identify the factors that constrain their pursuit of well-being,the author suggests it is useful to describe four sets of activities which are:

Accepted Answer

The set of activities described in Option D - earning income, coping with fluctuations, building future through investment and acquiring goods and services - directly relates to the pursuit of well-being for households in developing countries. Earning income is a fundamental activity for improving one's standard of living, coping with fluctuations enables households to absorb shocks and build resilience, and investing in the future through savings and acquiring goods and services helps ensure a better quality of life. Option A is too broad and general, Option B focuses more on environmental concerns than household well-being, and Option C includes access to healthcare but is otherwise too similar to Option A.

Question 15

From the study of Filmer,et al.(2000),in Zimbabwe,among women who had given birth in a rural health center,what percentage reported being hit by a nurse during delivery?

Accepted Answer

According to the study by Filmer et al. (2000) in Zimbabwe, 13% of women who had given birth in a rural health center reported being hit by a nurse during delivery. This indicates a disturbingly high prevalence of physical abuse during childbirth in Zimbabwean health centers.

Question 16

Amanda and Bill consume the exact same quantities of every consumption item,but Amanda gets to make her consumption choice decisions on how to spend her income while Bill's consumption levels are dictated by the government.According to economist-philosophers like Amartya Sen,which of the following statement is true?

Accepted Answer

According to Amartya Sen's capability approach, well-being is not just about the quantity of goods and services consumed, but the freedom to choose how to live one's life. Amanda's ability to make her own consumption choices means she has a higher level of freedom in determining her well-being compared to Bill, whose consumption is dictated by the government. Therefore, Amanda has a higher well-being.

Question 17

The textbook's definition of well-being is a summary assessment of all of the following except:

Accepted Answer

The answer of The textbook's definition of well-being is a...

Question 18

There are many factors that limit households' success in their pursuit of well-being.We group these "Determinants of well-being" into following categories except:

Accepted Answer

The determinants of well-being typically include assets, needs, and market conditions and institutions. "Family" is not commonly categorized as a determinant of well-being in this context, as it is more of a social or demographic factor rather than a direct determinant like the others listed.

Question 19

Howlats loans are loans that citizens borrow from:

Accepted Answer

Howlats loans are loans that citizens borrow from friends, relatives, and neighbors.

Question 20

All of the following are considered as consumption smoothing except:

Accepted Answer

Option A, B and C are all examples of consumption smoothing techniques as they try to minimize the fluctuations in consumption over time. Option D, however, is not a consumption smoothing technique as it involves borrowing and increasing current consumption at the expense of future consumption.

Quiz 2: Well-Being