Question

The Gross Domestic Product (GDP) in Rupees grew at 7% during 2012-2013. For international comparison, the GDP is compared in US Dollars (USD) after conversion based on the market exchange rate. During the period 2012-2013 the exchange rate for the USD increased from Rs. 50/USD to Rs. 60/USD. India's GDP in USD during period 2012-2013.

• A.
  Increased by 5%
• B.
  Decreased by 13%
• C.
  Decreased by 20%
• D.
  Decreased by 11%

Answer 1

The correct option is D

Decreased by 11%
Let GDP before year 2012-2013 be 100 Rs.

During 2012-2013 GDP increased by 7%

So, GDP in year 2012-2013 = 107 Rs.

Now exchange rate for USD change from Rs. 50/USD to Rs. 60/USD.

$i.e.valueofRupeereducedto\frac{5}{6}oforiginalvalue$

$So,newGDP\left(inUSD\right)=107\times \frac{5}{6}=89.16$

Effective change is from 100 to 89.16

= 10.83% decrease $\simeq$ 11% decrease