Suppose the savings rates by income quartiles in Indonesia are given by the foll
ID: 1239814 • Letter: S
Question
Suppose the savings rates by income quartiles in Indonesia are given by the following:1st quartile - 5% savings rate
2nd quartile- 7% savings rate
3rd quartile- 10% savings rate
4th quartile - 20% savings rate
A). Illustrate the above relationship between income and savings rate using a graph with
income on the x-axis and total savings on the y-axis.
B). Will a government policy to redistribute income to achieve less income inequality
potentially help or hurt growth in this case? Illustrate your answer graphically.
Explanation / Answer
A) graph can easily be plotted using excel or other software. B) Here the policy would hurt the growth.