CA Foundation · Quantitative Aptitude · Index Numbers
A working-class family could buy its base-year basket of goods and services for ₹20,000. At current-year prices the same basket costs ₹30,000. Using the aggregate expenditure method, the cost of living index for the current year is:
The cost of living index is 150. The aggregate expenditure method divides the current cost of the base-year basket (₹30,000) by its base-year cost (₹20,000) and multiplies by 100, so prices are 50% higher than the base year.
- A66.67
- B50
- C150Correct
- D120
Explanation
In the aggregate expenditure method, CLI = (Σp1q0 / Σp0q0) × 100 = (30,000 / 20,000) × 100 = 150. The value 66.67 comes from inverting the ratio (20,000/30,000), which is wrong. The value 50 is the percentage rise in cost, not the index.
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