Question

What is the ratio of the current account balance in 2010 to the current account balance in 2005?

• A. 0.35
• B. 4.56
• C. 5.01
• D. 2.57
• E. 5.30

Hint:

When a quantity is given as a percentage of GDP, multiply by the corresponding year's GDP to get the absolute value. For ratios involving deficits/surpluses, use magnitudes if the sign is the same in both years.

Answer 1

Answer: (E)

Step 1: From the table, the current account balance as % of GDP is \(-1.272%\) in 2005 and \(-3.268%\) in 2010. Convert these to absolute balances using GDP (current prices).
2005: \( \text{CAB}_{2005} = 1.272% \times 35662.2 = 0.01272 \times 35662.2 \approx 453.62\).
2010: \( \text{CAB}_{2010} = 3.268% \times 73555.34 = 0.03268 \times 73555.34 \approx 2403.79\).
(We take magnitudes since both are deficits.) Step 2: Ratio \[ \frac{\text{CAB}_{2010}}{\text{CAB}_{2005}} \approx \frac{2403.79}{453.62} \approx 5.30. \] Hence the required ratio is \(\boxed{5.30}\).