Question
In an economy with a population of 100, there are 75 farmers and 25 lenders. The farmers use the funds to finance the planting and
In an economy with a population of 100, there are 75 farmers and 25 lenders. The farmers use the funds to finance the planting and tending of their crops. The rate of profit for the harvest is 10%, while the interest rate charged is 6%. Compare the following two cases. Case A: All farmers are able to borrow. Case B: 40 farmers are credit-excluded. The Lorenz curves for the two cases are depicted in the figure. Based on this information, which of the following statements is correct? A: the lenders' share of the total income is 40% Bs 60% C The Gini coefficient for Case A is 0.4 D: The Gini coefficient for Case 8 is 0.16 higher than the coefficient for Case A
Cumulative share of income (%) 40 Cumulative share of the population from lowest to highest income (%)Step by Step Solution
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