CAT WhatsApp Group
Sign in
Please select an account to continue using cracku.in
↓ →
CAT WhatsApp Group
Five countries engage in trade with each other. Each country levies import tariffs on the other countries. The import tariff levied by Country X on Country Y is calculated by multiplying the corresponding tariff percentage with the total imports of Country X from Country Y.
The radar chart below depicts different import tariff percentages charged by each of the five countries on the others. For example, US (the blue line in the chart) charges 20%, 40%, 30%, and 30% import tariff percentages on imports from France, India, Japan, and UK, respectively. The bar chart depicts the import tariffs levied by each county on other countries. For example, US charged import tariff of 3 billion USD on UK.
Assume that imports from one country to another equals the exports from the latter to the former.
The trade surplus of Country X with Country Y is defined as follows.
Trade surplus = Exports from Country X to Country Y - Imports to Country X from Country Y.
A negative trade surplus is called trade deficit.
The values given in both charts together are represented in the table below, with the import tariff percentages charged by each of the five countries on the others represented as a percentage, and the import tariffs levied by each country on other countries are represented in brackets(in billion USD).
Trade surplus/trade deficit of India with the UK = Exports from India to the UK - Imports from India to the UK
Exports by India to the UK would be the same as the UK's imports from India.
The UK is charging a 30% tariff on India, and the tariff imposed by the UK on India equals 3 billion USD.
So, 30% of the imports equals 3 billion USD.
$$\dfrac{30}{100}\ \times\ $$ Imports $$=\ 3$$
Imports $$=\ 1\ \times\ 10\ =\ 10$$ billion USD.
The value of imports by the UK from India = India's export to the UK = 10 billion USD.
Imports by India from the UK can be calculated as,
India is charging a 20% tariff on the UK, and the tariff imposed by India on the UK equals 5 billion USD.
So, 20% of the imports equals 5 billion USD.
$$\dfrac{20}{100}\ \times\ $$ Imports $$=\ 5$$
Imports $$=\ 5\ \times\ 5\ =\ 25$$ billion USD.
The value of imports by India from the UK = 25 billion USD.
We can clearly see that the Imports are greater than the exports for India from the UK. So, the trade deficit can be calculated as,
Trade deficit = Exports from India to the UK - Imports from India to the UK = 10 billion USD - 25 billion USD = -15 billion USD.
So, there is a deficit of 15 billion USD.
Hence, the correct answer is option B.
Create a FREE account and get:
Educational materials for CAT preparation
