CMA Foundation · Fundamentals of Business Mathematics and Statistics · Index Numbers and Time Series
The consumer price index for a city rose from 100 in the base year to 250 in the current year. A worker's money wage in the current year is ₹30,000 per month. What is the real wage in base-year rupees?
The real wage is ₹12,000. Real wage is found by deflating the money wage with the price index: 30,000 divided by 250 and multiplied by 100. Prices have risen to 2.5 times, so purchasing power in base-year rupees is lower than the money wage.
- A₹12,000Correct
- B₹7,500
- C₹75,000
- D₹15,000
Explanation
Real wage = money wage / price index × 100 = 30,000/250 × 100 = ₹12,000. Check: 12,000 × 2.5 = 30,000. Multiplying instead of dividing gives ₹75,000, which wrongly inflates the real wage.
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