ECON F313: Issues in Economic Development Comprehensive Examination (Closed Book) - First Semester 2018-19 Time: 180 minutes Total Marks: 80 Date: 08.12.2018 Answer all the questions and All parts of a single question must be answered together 1. a. Explain with the help of a theory why less developed countries should avoid dependence on primary products in trade (for exports). (4) b. Explain the vent for surplus theory of trade with the help of a diagram. (4) 2. In ‘Thor Ragnarok’, Thor crash lands in a planet called ‘Sakaar’. Here, Thor teamed up with Hulk (a powerful friend) and then persuaded one of the Valkyrior (a strong fighter) to fight Hela (a strong enemy) to save his planet Asgard. Why Thor tried and formed team with these people and not anyone else (apart from reasons of friendship)? Link this with an economic theory and prove your logic with some basic equations. (6) 3. a. In case of aggregate growth modelling part of planning, if rate of depreciation=0.04, capital output ratio is 3, share of profit in income is 0.5, saving propensity out of capital income is 40% and our targeted growth rate is 6%, what should be the saving propensity of the wage earners to achieve the target? (4) b. Suppose that the economy of Eternia has two sectors, Mining and Electricity. For each unit of output, Mining requires 0.4 units of its own production and 0.2 units of Electricity. Moreover, for each unit of output, Electricity requires 0.3 units of Mining and 0.6 of its own production. The final demand is 20 units from Mining and 10 units from Electricity. i. Write the two sectoral target (demand) equations for both sectors. Write the same in matrix form as well. (2+1) ii. Determine the production levels from each sector that are necessary to satisfy the final demand. (4) 4. Explain how share cropping might be relatively efficient in a subsistence economy, although it is an inefficient outcome. (6) 5. a. Can portfolio investment lead growth? Explain. (4) b. Explain the problems of measurements of total aids that a country receives in a given time period. (6) 6. Due to what, there can positive growth rates in Romer’s model? (7) 7. Explain the process of origin of debt crisis in 1980’s through its roots in 1974 and 1979 oil price shock? (8) 8. Why a modern sector firm in case of big push theory is a limit price monopolist? (4) 9. a. Explain the shape of supply of labour curve in presence of child labour in the model by Kaushik Basu and discuss about the equilibrium outcomes. (6) b. In the film Philadelphia, Tom Hanks is fired from his job by his firm after discovering he has AIDS. It was the first Hollywood film to tackle the issue of AIDS and homophobia. What social stigma is associated with spread of AIDS and what is the reality about the disease? What are problems faced by AIDS orphans and what are possible solutions? (6) 10. A standard economic policy prescription for generating urban employment opportunities is to eliminate factor price distortions by using “correct” prices. Explain when this correction can increase employment opportunities and discuss whether this correction can lead to problem of migration. (8) Page 1 of 1 .