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Chapter 8: Problem 3

How does the World Bank classify countries in terms of economic categories?

Short Answer

Expert verified
The World Bank classifies countries into four/main economic categories based on Gross National Income (GNI). These categories are: Low income, Lower-middle income, Upper-middle income, and High income.

Step by step solution

01

Understanding Gross National Income (GNI)

Gross National Income (GNI) is the total amount of money earned by a nation's people and businesses. It includes the nation's GDP, plus the income from overseas. Countries are often classified by GNI per capita to determine economic categories.
02

Identifying World Bank's Economic Classes

The World Bank classifies economies into four income categories: Low income, Lower-middle income, Upper-middle income, and High income. This classification is carried out annually and is based on the Atlas method, which calculates GNI in local currency and then converts it to US dollars.
03

Describing the Economic Classes

1. Low-income economies are those with a GNI per capita of $1,045 or less in 2021. \n 2. Lower-middle-income economies are those with a GNI per capita between $1,046 and $4,095. \n 3. Upper-middle-income economies are those with a GNI per capita between $4,096 and $12,695. \n 4. High-income economies are those with a GNI per capita of $12,696 or more.

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