CA Foundation · Quantitative Aptitude · Index Numbers
Ramesh's monthly salary rose from ₹24,000 in the base year to ₹36,000 in the current year, while the consumer price index rose from 100 to 180. What is his real salary in the current year (in base-year rupees)?
His real salary is ₹20,000. Deflating the money salary of ₹36,000 by the price index of 180 and multiplying by 100 gives the base-year purchasing power. Prices rose faster than pay, so real income fell from ₹24,000 to ₹20,000.
- A₹36,000
- B₹64,800
- C₹20,000Correct
- D₹24,000
Explanation
Real wage = money wage ÷ price index × 100 = 36,000 ÷ 180 × 100 = ₹20,000. Though the money salary increased by 50%, prices rose by 80%, so purchasing power fell below ₹24,000. Multiplying by 1.8 (₹64,800) wrongly inflates the figure instead of deflating it.
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