CA Foundation · Business Economics · Business Cycles
Real GDP of an economy was ₹200 lakh crore at the peak and ₹190 lakh crore at the following trough. What is the decline from peak to trough, as a percentage of the peak level?
The decline is 5%. Output fell by ₹10 lakh crore from the peak of ₹200 lakh crore, and 10 divided by 200 times 100 gives 5%. Using the trough as the base would wrongly give 5.26%.
- A5%Correct
- B10%
- C5.26%
- D4.5%
Explanation
Fall = 200 - 190 = ₹10 lakh crore. Percentage of peak = 10/200 × 100 = 5%. Using the trough as the base gives 10/190 = 5.26%, which is wrong because the decline is measured against the peak.
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