CA Foundation · Quantitative Aptitude · Index Numbers
The consumer price index for the current year is 250 with respect to the base year (base = 100). Assuming the index fully reflects the price change of the consumer basket, what is the purchasing power of one rupee of the current year in terms of base-year rupees?
The purchasing power is ₹0.40. Purchasing power of money is the reciprocal of the price index, so it equals 100 divided by 250, which is 0.40. A current rupee buys only what 40 paise bought in the base year.
- A₹2.50
- B₹0.25
- C₹0.60
- D₹0.40Correct
Explanation
Purchasing power of money is the reciprocal of the price index: 100/250 = ₹0.40. Option ₹2.50 inverts this, treating the index as if it measured purchasing power rather than price level.
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