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A country has 3 major economic sectors: agriculture, manufacturing and services - with their share of the country's Gross Domestic Product (GDP) being 40, 20 and 40 percent, respectively. Of these, services is growing at 10% per annum, whilst agriculture is growing at 4%. The GDP in aggregate is estimated to be growing at 6% yearly: what is the annual rate of growth of manufacturing in percent?

Solution

✅ Correct Option: 1

The overall GDP growth is a weighted average of each sector's growth:

0.4×4+0.2×g+0.4×10=60.4 \times 4 + 0.2 \times g + 0.4 \times 10 = 6

1.6+0.2g+4.0=61.6 + 0.2g + 4.0 = 6

5.6+0.2g=65.6 + 0.2g = 6


0.2g=6−5.60.2g = 6 - 5.6

0.2g=0.40.2g = 0.4

g=0.40.2g = \dfrac{0.4}{0.2}

g=2g = 2


The annual rate of growth of manufacturing is 2%2\%.

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