CAT 2000 | Question: 148

Question

Answer the following question based on the information given below.

FEI for a country in a year, is the ratio (expressed as a percentage) of its foreign equity inflows to its GDP. The following figure displays the FEIs for select Asian countries for the years $1997$ and $1998$. 

It is known that China’s GDP in $1998$ was $7\%$ higher than its value in $1997$, while India’s GDP grew by $2\%$ during the same period. The GDP of South Korea, on the other hand, fell by $5\%.$ Which of the following statements is/are true?

1. Foreign equity inflows to China were higher in $1998$ than in $1997$.
2. Foreign equity inflows to China were lower in $1998$ than in $1997$.
3. Foreign equity inflows to India were higher in $1998$ than in $1997$.
4. Foreign equity inflows to South Korea decreased in $1998$ relative to $1997$.
5. Foreign equity inflows to South Korea increased in $1998$ relative to $1997$.

 

• A. I, III and IV
• B. II, III and IV
• C. I, III and V
• D. II and v

Comments

China 

$\frac{F_1}{x} = 5.96$ and $\frac{F_2}{1.07x} = 4.8$ , solving this we will get $F_1 = \frac{596*F_2}{513.6}$
 

Therefore, we conclude that $F_1 > F_2$. Statement $I$ is false but Statement $II$ is true.

India

$\frac{F_1}{x} = 1.71$ and $\frac{F}{1.02x} = 0.72$, solving this we get $F_1 = \frac{171*F_2}{73.4}$

Therefore, we conclude that $F_1 > F_2$. Statement $III$ is false. 

South Korea

$\frac{F_1}{x} = 2.16$ and $\frac{F_2}{0.95x} = 2.5$ , solving this we will get $F_1 = \frac{216*F_2}{237.5}$

Therefore, we conclude that $F_1<F_2$, Statement $V$ is True and Statement $IV$ is false.

 

Option $D$ is the answer.