Instructions

Answer these questions based on the data given below: The figures below present annual growth rate, expressed as the % change relative to the previous year, in four sectors of the economy of the Republic of Reposia during the 9 year period from 1990 to 1998. Assume that the index of production for each of the four sectors is set at 100 in 1989 Further, the four sectors: manufacturing, mining and quarrying, electricity, and chemicals, respectively, constituted 20%, 15%, 10%, 15 % of total industrial production 1989.

Question 27

The overall growth rate in 1991 of the four sectors together is approximately:

Solution

Assume total base to be 100 (index = 100).
Contribution of manufacturing sector = 20% = 20 (in 1989).
In 1990, it has grown by 9%.
=> Contribution in 1990 = 1.09*20 = 20 + 1.8 = 21.8.

Hence, the growth of manufacturing sector in 1990 is 21.8 . Similarly for other sectors the growth rates fpr mining 15.6 , electricity 10.9 and chemicals is 16.2 . So total overall groth is 64.5 %. </br>
Growth of manufacturing sector in 199 is  21.8 - 0.01*21.8 = 21.6 . Similarly for other sectors the growth rates fpr mining 15.7 , electricity 11.88 and chemicals is 16.36 . So total overall groth is 65.54 %. Hence the growth rate change in 1991 is (65.54-64.5) / 64.5 = 1.5%.
Hence option D. 


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