Index NumbersMCQPYQ July 21Question 3885 of 197
All Questions

The consumer price index goes up from 120 to 180 when salary goes up from 240 to 540, what is the increase in real terms?

Options

A80\displaystyle 80
B150\displaystyle 150
C100\displaystyle 100
D240\displaystyle 240
For any discrepancies in this question, email contact@cadada.in

Correct Answer

✅ Option c — 100\displaystyle 100

All Options:

  • A80\displaystyle 80
  • B150\displaystyle 150
  • C100\displaystyle 100
  • D240\displaystyle 240

Ad

Detailed Solution & Explanation

We are given: - Initial Consumer Price Index (CPI0\displaystyle CPI_0) = 120\displaystyle 120 - Final Consumer Price Index (CPI1\displaystyle CPI_1) = 180\displaystyle 180 - Initial Salary (S0\displaystyle S_0) = 240\displaystyle 240 - Final Salary (S1\displaystyle S_1) = 540\displaystyle 540 To calculate the change in salary in real terms (constant prices relative to base CPI = 100), we calculate the real wages for both periods: 1. **Real Wage in Initial Period**: RW0=S0CPI0×100=240120×100=200RW_0 = \frac{S_0}{CPI_0} \times 100 = \frac{240}{120} \times 100 = 200 2. **Real Wage in Final Period**: RW1=S1CPI1×100=540180×100=300RW_1 = \frac{S_1}{CPI_1} \times 100 = \frac{540}{180} \times 100 = 300 3. **Increase in Real Terms**: ΔRW=RW1−RW0=300−200=100\Delta RW = RW_1 - RW_0 = 300 - 200 = 100 Thus, the increase in real terms is 100\displaystyle 100. Hence, **Option C** is the correct answer.

About This Chapter: Index Numbers

Paper

Paper 3: Quantitative Aptitude

Weightage

4-6 Marks

Key Topics

Construction of Index Numbers, Time Series

This chapter covers Construction of Index Numbers, Time Series and is part of Paper 3: Quantitative Aptitude in the CA Foundation exam.

View Official ICAI Syllabus

Exam Strategy Tip

This topic carries 4-6 Marks weightage. Focus on understanding core concepts rather than memorizing.

Related Comparison Tables

Cardinal vs Ordinal Utility: Measuring Satisfaction

More Questions from Index Numbers

In price index, when a new commodity is required to be added, which of the following index is used?

Fisher's ideal formula for calculating index number satisfies the ________

Shifted Price Index = Original Price IndexPrice Index of the year on which it has to be shifted×100\displaystyle \frac{\text{Original Price Index}}{\text{Price Index of the year on which it has to be shifted}} \times 100

If Laspeyres's Index Number is 250 and Paasche's Index Number is 160, then Fisher's Index number is

If ∑P0q0=240\displaystyle \sum P_0q_0 = 240, ∑P1q0=480\displaystyle \sum P_1q_0 = 480, ∑P0q1=600\displaystyle \sum P_0q_1 = 600 and ∑P1q1=192\displaystyle \sum P_1q_1 = 192, then Laspeyres's Index Number is

If ΣPnqn=249\displaystyle \Sigma P_n q_n = 249, ΣP0q0=150\displaystyle \Sigma P_0 q_0 = 150, ΣPnq0=145\displaystyle \Sigma P_n q_0 = 145 and Paasche's Index Number = 150, then Fisher's Ideal Price Index Number is

Ready to Master Index Numbers?

Practice all 197 questions with instant feedback, earn XP, track your streaks, and ace your CA Foundation exam.

Start Practicing — It's Free