3,800 views

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 ____

1. $37.50$
2. $35.70$
3. $25.00$
4. $10.00$
Migrated from GO Mechanical 3 years ago by Arjun

Fiscal deficit in 2015 $= 4\%$ of GDP in 2015

Fiscal deficit in 2016 $= 5\%$ of GDP in 2016

GDP in 2016 $= 1.1 \times$ GDP in 2015

So, Fiscal deficit in 2016 $= 5\%$ of $1.1 \times$ GDP in 2015 $=5.5\%$ of GDP in 2015.

So, Fiscal deficit increased from $4\%$ to $5.5\%$ of the GDP in 2015.
Percentage increase $= \dfrac{5.5-4}{4} \times 100\%= \dfrac{300}{8}\% = 37.5\%$
by