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Question 2: Multiple Choice (15 points) i . Cohen, Dupas and Schaner studied the optimal subsidy level for medications to treat malaria. They found that setting the price of these medications too low could be a problem because: a) It is not a problem-the medications should be free. b) People might use them even if they do not have malaria, which contributes to drug resistance. c) If the price of this medication is too low, people might not be willing to pay for other medications that they need. d) Setting prices too low could actually reduce demand because some medications are Giffen goods. e) b. and d. ii. Which of the following explains low population growth in the final stages of the demographic transition? f) Birth rate is low, death rate is low Birth rate is low, death rate is high h) Birth rate is high, death rate is low i) Birth rate is high, death rate is high i) Both a. and d. iii. In class, we studied a summary of 7 randomized evaluations of microfinance. These studies generally found that: a) Microfinance increased access to credit b) Microfinance increased business profits c) Microfinance increased household income d) None of the above e) All of the above iv . Which of the following is/are widely used by the poor to respond to risk? a) Changing labor supply in response to unexpected events ("shocks") b) Transfers from friends and family C) Micro health insurance d) Rainfall index insurance e) a. and b. V . At which point(s) in the graph below could one bad shock lead to a permanent reduction in income? Select all correct answers