CA Foundation · Business Economics · Business Cycles
An economy's real GDP was ₹400 lakh crore at the previous peak and ₹380 lakh crore at the trough. It then rose to ₹399 lakh crore. The peak-to-trough fall in GDP, and the percentage of that fall recovered so far, are respectively:
The peak-to-trough fall is 5%, and 95% of it has been recovered. GDP fell from 400 to 380, a drop of 20, which is 5% of 400. It then rose by 19 to 399, and 19 divided by 20 equals 95%.
- A5% and 95%Correct
- B5% and 90%
- C4.75% and 95%
- D5% and 19%
Explanation
Fall = 400 − 380 = 20, which is 20/400 = 5% of the peak. Recovery so far = 399 − 380 = 19. Share of the fall recovered = 19/20 = 95%. Option four gives 19 as a percentage of 100 incorrectly (19%), and 90% mis-states the recovery.
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