CMA Foundation · Fundamentals of Business Mathematics and Statistics · Index Numbers and Time Series
In a town, the consumer price index (base year 2015 = 100) stood at 250 in 2024. A clerk's monthly salary in 2024 is ₹40,000. What is the clerk's real salary in terms of base-year (2015) rupees?
The real salary is ₹16,000. Deflating a money value requires dividing it by the price index and multiplying by 100, so 40,000 divided by 250 times 100 gives 16,000 in base-year rupees. Multiplying by the index would wrongly inflate the figure.
- A₹10,000
- B₹16,000Correct
- C₹62,500
- D₹1,00,000
Explanation
Real salary = money salary / index × 100 = 40,000 / 250 × 100 = ₹16,000. Option ₹62,500 comes from dividing by 100 and multiplying by 250... actually it inverts the ratio (40,000 × 250/160). ₹1,00,000 results from multiplying by the index ratio (40,000 × 2.5) instead of dividing.
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