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CAT 2000 — DILR Question 23

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Passage / Data

Answer the following question based on the information given below.

The table shows trends in external transactions of Indian corporate sector during the period 1993-94 to 1997-98. In addition, following definitions hold good.

Salesi , Importsi, and Exportsi respectively denote the sales, imports and exports in year i.

Deficit in year i, Deficiti = Importsi – Exportsi.

Deficit Intensity in year i, DIi = Deficiti / Salesi.

Growth rate of deficit intensity in year i, GDIi = (DIi – DIi-1)/DIi-1

Further, note that all imports are classified as either raw material or capital goods.

Trends in External Transactions of Indian Corporate Sector (All figures in %)

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Which of the following statements can be inferred to be true from the given data?

 

Answer & solution

Correct answer: Deficit intensity has increased every year between 1993-94 and 1996-97.

  • A

    During the 5 year period between 1993-94 and 1997-98, exports have increased every year.

  • B

    During the 5 year period between 1993-94 and 1997-98, imports have decreased every year.

  • C

    Deficit in 1997-98 was lower than that in 1993-94.

  • Deficit intensity has increased every year between 1993-94 and 1996-97.

Solution

Deficit intensity = DeficitSales=ImportSales-ExportSales= Import Intensity - Export Intensity

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Growth rate in 1994-95 = 6.3-5.15.1×100 = 23.5%

Growth rate in 1995-96 = 7.6-6.36.3×100 = 20.63%

Growth rate in 1996-97 = 8-7.67.6 × 100 = 5.26%

Growth rate in 1997-98 = 5-88 ×100 = -37.5%

we can conclude that deficit intensity is increasing between 1993-94 and 1996-97.

Hence, option (a).

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CAT 2000 DILR Q23: Which of the following statements can be inferred to be true from the given data? — Solution | TheCATExam