CA Foundation · Quantitative Aptitude · Index Numbers
Ramesh's monthly salary was ₹20,000 in 2015 (base year). In 2023 it is ₹30,000, and the consumer price index for 2023 with 2015 = 100 is 125. What is his real wage in 2023 in terms of 2015 rupees?
His real wage is ₹24,000. Deflating the money wage of ₹30,000 by the price index means dividing by 125 and multiplying by 100. This expresses the 2023 salary in constant 2015 rupees, showing that purchasing power has risen above the original ₹20,000.
- A₹37,500
- B₹24,000Correct
- C₹20,000
- D₹25,000
Explanation
Real wage = money wage ÷ price index × 100 = 30,000 ÷ 125 × 100 = ₹24,000. Multiplying by 1.25 gives ₹37,500, which wrongly inflates the wage instead of deflating it. Real wage is 24,000, so his purchasing power has improved over the base year's 20,000.
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