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If the imports of Company A in 1997 were increased by 40 percent, what would be the ratio of exports to the increased imports?

1.20

1.25

1.30

cannot be determined

Answer : Option B

Explanation :

In 1997 for Company A we have:

$\frac { E } { I }$ = 1.75 i.e., E = 1.75I

where E amount of exports, I = amount of imports of Company A in 1997.

Now, the required imports I₁ = I + 40% of I = 1.4I.

Required ratio = $\frac { E } { I1 }$ = $\frac { 1.75I } { 1.4I}$ = 1.25

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