1. Briefly describe some of the differences between classical and Keynesian economics.
2. The capital gains tax is a tax that must be paid when you sell an asset (such as stock or land) that has increased in value since you purchased it. Why might decreasing the capital gains tax be desirable to the economy as a whole? (Hint: you do not have to pay capital gains taxes on an asset until you sell it.)
3. The Great Depression was a prolonged period of declining output and high unemployment. Following this event, the Keynesian view of the economy became more popular than the classical view. Can you explain why?
4. Singapore’s Ivy League Approach to Economic Growth
The Wall Street Journal, Thursday May 6, 2004.
More than 40% of the recent graduating class of Singapore’s Raffles Junior College were accepted to elite universities. Approximately half of those students, or around 200, will attend schools such as Yale, Cornell, and Cambridge. Raffles Junior College is Singapore’s government sponsored feeder school that scholarships all students who pass the strenuous admissions exams.
After completion of a two-year program heavily focused on math and science, the students are funneled to elite schools in the U.S. and Europe. However, to create balance, students are encouraged to do volunteer work and participate in extracurricular activities. Any student that gains acceptance to one of those institutions will also be government sponsored if they agree to come back to Singapore and take positions in government or industry for at least six years.
The entire approach is part of Singapore’s economic development effort. The government’s belief is that this investment in human capital will pay substantial long-term benefits for the island economy. Only the gifted make it into Raffles and when the time comes they attend clinics on the subtleties of the Ivy League application process. To date the strategy appears to be working well.
A. What is human capital?
B. How are education and economic growth connected?
C. If investments in human capital provide such substantial benefits, then why is investment in human capital a difficult decision for many countries?
D. What other economic issues are closely tied to human capital investments?
6. Developmental Economics: Virtual Zambia
The virtual Zambia website provides a wealth of information about Zambia’s history and the country’s current economic woes. It also provides a great deal of detail about issues of interest to developmental economists. For example, what is the impact of setting aside over 30% of the nation’s land as wildlife sanctuaries? What type of natural resources does the country have access to? Prowl around the site and expose yourself to the economic and social issues faced by another country and then try to answer a few questions about the site.
http://www.bized.ac.uk/virtual/dc/
A. How do economic growth and economic development differ?
B. Provide a brief recent history of Zambia’s economy including when Zambia gained independence and the economy’s response.
C. What are the three goals for the economic restructuring of Zambia?
7. The World Bank Online: Looking for Differences Among High Income and Low Income Countries
The World Bank is an important source for reports and comparative data on countries at varying levels of economic development. You can visit the World Bank Web site. On the home page you will find categories of information, including "data and statistics" under "Resources" and data profiles by country or country groupings under "Country Data."
You can get a dramatic "feel" for the differences among "Low Income, High Income OECD, and Heavily Indebted Poor Countries" by selecting only a few current World Development Indicators. Go to the URL for the World Bank site. On the home page, click on "Country Data." Not only will you find data for 208 individual countries, but you will find aggregates or averages for groups of countries.
To compare some indicators for low-income and high-income countries, select each group in turn. Troll down the page and click on "High Income OECD." Under the title "People," look at population growth rate, life expectancy at birth and the mortality rate, infant (per 1000 live births) for 2001. Under the title "Economy," look at GNI (Gross National Income) per capita (current US$) for 2002. Then, under "Technology and Infrastructure," look at personal computers (per 1000 people) for 2002. Write these numbers in one column. Repeat this same process for "Low Income" countries. Then, repeat the process again for ""Heavily Indebted Poor Countries." Now, you will have three columns of data to compare for the three country groups.
http://www.worldbank.org/data/countrydata/countrydata.html
A. What are the population growth rates for the three country groups, in the order in which you looked at them?
B. What is the GNI per capita for each of the three country groups for 2002?
C. What is the mortality rate for infants for each of the three country groups for 2002?
D. It appears that rapid population growth is associated with low incomes and with high mortality rates. Why kind of causality is involved in the process whereby rapid population growth becomes a country characteristic?
E. What is life expectancy at birth for, in turn, each of the three country groups for 2002?
F. It appears that life expectancy rises with per capita incomes. Why would this usually be the case?
G. How many personal computers (per 1000 people) does each country group, in turn, have? Why are these numbers important as a measure of economic development?