1. What is a poverty trap? Explain how a nutritional poverty trap works. Explain how a shock (such as lack of rainfall leading to decreased crop yield) might permanently trap a family into poverty.
2. Portlandia is a small, poor country where the people are divided into four equal sized groups consisting of 1000 people each. One group earns $100 a year, one earns $500 a year, one earns $900 a year, and the final group earns $1500 a year. The poverty line is set at $1000. We have a budget of $300,000 for poverty alleviation.

a.Please calculate the Head Count Ratio, and Income Gap Ratio for this country

b.Suppose the World Bank's policy is to minimize head count ratio. What will your recommendation be? What will the new head count ratio be?

c.Do you think this is the correct approach to poverty alleviation? Why or why not?