Fiscal deficit was 4% of the GDP in 2015 and that increased to 5% in 2016. If the GDP increased by 10% from 2015 to 2016, the

Q. Fiscal deficit was 4% of the GDP in 2015 and that increased to 5% in 2016. If the GDP increased by 10% from 2015 to 2016, the percentage increase in the actual fiscal deficit is

            (A) 37.50             (B) 35.70                    (C) 25.00                   (D) 10.00

Sol: 37.50

Sol:

GDP increased by 10% from 2015 to 2016 ⇒ 

Let GDP in 2015 = X

GDP in 2016 = 1.1 X

Fiscal deficit was 4% of the GDP in 2015 and that increased to 5% in 2016 ⇒

FD in 2015 = 0.04 X

FD in 2016 = 0.05 (1.1 X) = 0.055 X

Percentage increase in the actual fiscal deficit: