4. Consider the following scatter plot, which plots GDP per capita for the year 2014 on the horizontal axis and the Fiscal Freedom Index from the Heritage Foundation for the year 2014 on on the vertical axis. We discussed this Index in the first class and it measures how free individuals are from taxes. 100 ORT TU OMAC UBA Fiscal Freedom Index Heritage Foundation NOR TCD 150000 50000 100000 GDP per capita, PPP (constant 2011 international) (a) (5 points) Describe the scatter plot. (b) (5 points) When the countries in the plot are divided into the top 49 and bottom 49 countries in terms of their income levels, then the average Freedom Index for the 49 richest countries equals 73% and the standard deviation for these countries equals 16%. The average Freedom Index for the 49 poorest countries equals 77% and the standard deviation equals 10%. Test whether there is a statistically significant difference in the Fiscal Freedom Index between the poorest and richest countries. (HINT: Use the rule-of-thumb approach used in class to make this test. Show your work.) (c) (10 points) Discuss your result from part (b) using the discussion on state capacity and policy we had in class. 4. Consider the following scatter plot, which plots GDP per capita for the year 2014 on the horizontal axis and the Fiscal Freedom Index from the Heritage Foundation for the year 2014 on on the vertical axis. We discussed this Index in the first class and it measures how free individuals are from taxes. 100 ORT TU OMAC UBA Fiscal Freedom Index Heritage Foundation NOR TCD 150000 50000 100000 GDP per capita, PPP (constant 2011 international) (a) (5 points) Describe the scatter plot. (b) (5 points) When the countries in the plot are divided into the top 49 and bottom 49 countries in terms of their income levels, then the average Freedom Index for the 49 richest countries equals 73% and the standard deviation for these countries equals 16%. The average Freedom Index for the 49 poorest countries equals 77% and the standard deviation equals 10%. Test whether there is a statistically significant difference in the Fiscal Freedom Index between the poorest and richest countries. (HINT: Use the rule-of-thumb approach used in class to make this test. Show your work.) (c) (10 points) Discuss your result from part (b) using the discussion on state capacity and policy we had in class