Question 8

1. Initial state (2012):

   • Let the initial GDP in Indian Rupees be $G$.
   • Exchange rate: $1\text{ USD} = 50\text{ INR}$.
   • Initial GDP in USD:
     $$\text{GDP}_{\text{USD, initial}} = \frac{G}{50}.$$

2. Final state (2013):

   • The GDP in Rupees grew by $7\%$, so the final GDP in Rupees is $1.07 G$.
   • Exchange rate: $1\text{ USD} = 60\text{ INR}$.
   • Final GDP in USD:
     $$\text{GDP}_{\text{USD, final}} = \frac{1.07 G}{60}.$$

3. Ratio of final to initial GDP in USD:

   $$\frac{\text{GDP}_{\text{USD, final}}}{\text{GDP}_{\text{USD, initial}}} = \frac{1.07 G / 60}{G / 50} = \frac{1.07 \times 50}{60} = \frac{53.5}{60} \approx 0.89167.$$

4. Percentage change in USD GDP:

   $$\text{Percentage Change} = (0.89167 - 1) \times 100\% = -10.833\%.$$

Rounding to the nearest integer gives a decrease of approximately $11\%$.

This matches option D.