reading 18 question 8 (cfai book)

into, long, understand, different, concerned

can someone walk me through the solution to this question. Maybe taking a different approach. I do not get the flow of argument here. As far as i was concerned question asked which country would have higher gwoth rate in the future if trend continued.
well clearly croatia no? (crotia gdp has higher growth from q1 to q2 and is same trend continues it will still have higher growth in future.
solution makes several tables and goes into a fairly long winded argument which i do not understand. can someone please explain. much appreciated.
thanks

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cchang

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发表于 2013-5-3 15:35 | 只看该作者

the two are different sized economies
So for the first number 28-30 for country 1 while 350-386 for Country 2 are not comparable.
28-30 is a 7.14% change, 350-386 is a 10.28% change.
However due to the different sizes - they need to be first common sized.
This is done by multiplying 7.14% by 30/52 to get 4.1%, and 10.28% by 386/665 to get 5.96%(rounded to 6%)
and then the comparable numbers are compared.
which leads to Croatia (2nd country having the higher growth rate).

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DoubleDip

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发表于 2013-5-3 15:37 | 只看该作者

cpk, question asked which economy would have a higher growth rate. as i understand growth rate is equal percentage change in gdp. e.g if current gdp is 100 and changed to 110 then the growth rate is 10 percent. regardless of initial size.
the question already gives gdp for both countries for both quarters 49-52, 607-665. So cant we simply calculate growth rate from these two figures and assume trend will continue. or are you assuming the question is asking for growth is absloute terms for example 1011 is 10 percent change but 1 change in absloute terms. but here units (currency is also different) so we cant compare in that sense too.
can you please give some analogy as i did not understand still (

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bigredhockey55

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发表于 2013-5-3 15:38 | 只看该作者

it is very similar to common sizing the statements. Make the base 100 by making each a fraction of the base and then compare them.
only then are you comparing apples to apples.

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reading 18 question 8 (cfai book)

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