CMA Foundation · Fundamentals of Business Mathematics and Statistics · Index Numbers and Time Series
A price index with base year 2015 = 100 stands at 160 in 2024. A worker's salary in 2015 was Rs 25,000 per month. What salary in 2024 would exactly maintain the 2015 purchasing power?
The salary needed is Rs 40,000. Prices have risen to 160 percent of the base level, so to keep the same purchasing power the 2015 salary of Rs 25,000 must be multiplied by 1.6, giving Rs 40,000 per month.
- ARs 35,000
- BRs 40,000Correct
- CRs 41,000
- DRs 15,625
Explanation
Required salary = 25,000 x 160/100 = Rs 40,000. Rs 35,000 would result from adding only 40 percent, a miscalculation. Rs 15,625 results from dividing by 1.6, which is the wrong direction.
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