Skip to content

CA Foundation · Quantitative Aptitude · Index Numbers

A consumer price index with base 2010 = 100 reads 160 for 2015 and 240 for 2022. A clerk earned ₹48,000 per month in 2015 and earns ₹66,000 per month in 2022. Measured in 2015 prices, how does the clerk's real salary in 2022 compare with that in 2015?

The real salary falls by about 8.33%. Deflating the 2022 salary of ₹66,000 by the price ratio 240/160 gives ₹44,000 in 2015 prices, which is lower than ₹48,000, a drop of roughly 8.33%.

  1. AIt falls by about 8.33%Correct
  2. BIt rises by 37.5%
  3. CIt falls by 33.3%
  4. DIt remains unchanged

Explanation

Real salary in 2022 at 2015 prices = 66,000 × 160/240 = ₹44,000. Change = (44,000 − 48,000)/48,000 = −8.33%. The 37.5% rise is only the money-salary increase (66,000/48,000), ignoring prices. The 33.3% fall is just the fall in the purchasing power of money (1 − 160/240) and ignores the salary rise.

Did you get it right without looking?

One question tells you little. A timed set on Index Numbers shows your real accuracy, how long you take and where you lose marks.

Practise Index NumbersFree diagnostic mock

More Index Numbers questions