INSTRUCTION: ANSWER ALL QUESTIONS. PROVIDING REFERENCES TO YOUR WORK IS A MUST.
Use the following articles to answer the questions (you may also use external sources.
Why Economists Are Still Grasping for Cure to Global Poverty
http://online.wsj.com/article/SB116845440351672808.html?mod=djem_jiewr_em
Africa’s Poverty Trap
http://online.wsj.com/article/SB117462055909446522.html?mod=djem_jiewr_em
Why Foreign Aid Is Hurting Africa
http://online.wsj.com/article/SB123758895999200083.html
Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa
http://online.wsj.com/article/SB123749211536187585.html
Achtung Bono! Economics Beats Goals
http://blogs.wsj.com/indiarealtime/2010/09/22/india-journal-achtung-bono-economics-beats-goals/
Global Crisis Slowed U.N. Antipoverty Drive
http://online.wsj.com/article/SB10001424052748703305004575504122898059694.html
IMF Lifts Africa Growth View
http://online.wsj.com/article/SB10001424052702304915104575573311333458420.html
Answer all 7 questions. Type your answers. Print it – Make sure you leave enough space for diagrams, and draw appropriate diagram by hand.
QUESTIONS:
1) Graphically show how it is possible that two steady states exist if the economies have similar rates of depreciation, population growth and technological progress. Under which condition might the economy eventually end up in the low k steady state? Explain the intuition.
Based on the diagram above, discuss critically whether countries are converging to similar per capita income? Are there any empirical studies (search in google scholar and cite two papers) to support your claim? (Hint: countries converging or diverging) (2 points)