Information from here: https://docs.google.com/spreadsheets/d/e/2PACX-1vR5Ny6_9AotoLsvlDHrESQ5SoIRDASAhT7SFhuCDMEggJayn6km0-skZZH1-QISbGlli41Cd8fByAmr/pubhtml

https://docs.google.com/spreadsheets/d/e/2PACX-1vR5Ny6_9AotoLsvlDHrESQ5SoIRDASAhT7SFhuCDMEggJayn6km0-skZZH1-QISbGlli41Cd8fByAmr/pubhtml

5. POLICY 1: A policy to reduce the Headcount Index Assume we are in the year 2004, and you are hired by the president of South Africa to design a policy to reduce the poverty headcount Index as much as possible. In order to simplify your calculations, assume that if the income of a household is exactly equal to the poverty line Z=325, the household is not poor. In order to implement the policy, the president imposes a tax of 10% on the income of all households earning 1,705 Rand per capita or more.

a. How much money does the South African government collect in tax revenues in 2004?

b. Recompute the Poverty Head Count Index, the Poverty Gap Index, and the FGT-2 index after your tax and transfer policy is implemented. Report these results in Table 4 below using 2 decimals.