CA Foundation · Quantitative Aptitude · Index Numbers
The cost of living index for a city rose from 100 in the base year to 250 in the current year. A worker earned ₹18,000 per month in the base year. What monthly income must the worker earn in the current year to maintain the same standard of living?
To keep the same standard of living, income must rise in proportion to the cost of living index. Multiplying the base income of ₹18,000 by 250/100 gives ₹45,000 as the required current monthly income.
- A₹45,000Correct
- B₹72,000
- C₹36,000
- D₹43,200
Explanation
Required income = base income × (current index/100) = 18,000 × 2.5 = ₹45,000. Option ₹72,000 results from dividing 18,000 by 0.25, a wrong inversion of the ratio. Option ₹36,000 uses 2 as the multiplier.
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