Neco 2025 Economics Question 15

A developing country has current per‑capita GDP of \(\text{₦}150{,}000\) and a poverty line set at \(\text{₦}80{,}000\). The government will raise public investment in infrastructure by \(20\%\) of current GDP, financed by a temporary tax that raises total tax revenue by \(5\%\) of GDP. The marginal propensity to consume (MPC) is \(0.75\) and the marginal propensity to import (MPM) is \(0.10\). The fiscal multiplier for autonomous investment is \(k = \frac{1}{1 - MPC + MPM}\). The country's Gini coefficient is currently \(0.45\) and is expected to fall by \(0.02\) for every \(0.5\%\) increase in per‑capita GDP (linear approximation). Determine:\n(a) the expected increase in per‑capita GDP after the investment boost (ignore price‑level changes);\n(b) the new per‑capita GDP;\n(c) whether the poverty line will be above the new per‑capita GDP (i.e., will poverty be eliminated?);\n(d) the projected Gini coefficient after the growth.