Neco Model Questions Vol1 2022 Economics Question 50

A country's real GDP grows at \(5\%\) per year and its population grows at \(2.5\%\) per year. Initially, per‑capita income is \(\₦150{,}000\) and \(40\%\) of the population lives below the poverty line of \(\₦100{,}000\). The income distribution has a Gini coefficient of \(0.45\). The government plans to raise \(5\%\) of total income from the top \(20\%\) of earners and redistribute it equally to the bottom \(80\%\) to reduce the Gini to \(0.35\). (a) What will be the per‑capita income after five years? (b) Assuming the income distribution remains proportionally unchanged, what is the new poverty rate? (c) After the redistribution, what is the new average income of the bottom \(80\%\) of the population?