IIFT 2014 Question Paper Question 78

Instructions

In the question below, a statement is followed by three assumptions numbered I, II and III. An assumption is something supposed or taken for granted. You have to consider the statement and the following assumptions and decide which assumptions are implicit in the statement.

Question 78

It is believed by many economists that to realize a 7 percent GDP growth rate in India, which is very much attainable, the gross fixed capital formation in the country must increase to 30 percent of GDP from the present level of 28 percent.
I. The target of 7 percent GDP growth is not feasible.
II. GDP growth rate is directly related to capital formation rate.
III. The GDP growth rate in a country is the only indicator of country’s economic development.

Solution

Author states that inorder to attain 7% GDP growth rate the gross fixed capital formation in the country must increase from 28% to 30%. Here the author assumed that GDP growth rate and gross fixed capital are related to each other. 
I is not true as the author believes it is very much attainable. III is not true. II is implicit assumption. 
Among the given, Only II is not there.
The answer is option D.



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