Index NumbersPYQ Sept 25Question 4198 of 197
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From the year 2015 to 2025, Consumer price index increased from 125 to 196. During this period, salary of the employees as per 7th\displaystyle 7^{th} pay commission recommendations was revised from ₹ 25,000 to ₹ 37,250. In real terms, an employee should get following amount as an additional amount to maintain his previous standard of living:

Options

A₹ 1,965
B₹ 1,950
C₹ 1,945
D₹ 14,200
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Correct Answer

Option b₹ 1,950

All Options:

  • A₹ 1,965
  • B₹ 1,950
  • C₹ 1,945
  • D₹ 14,200

Detailed Solution & Explanation

Let us calculate the additional amount needed by the employee to maintain their original purchasing power (standard of living):
1. **Given Data**:
- Consumer Price Index in 2015 (CPI2015\displaystyle \text{CPI}_{2015}) = 125\displaystyle 125
- Salary in 2015 = ₹ 25,000\displaystyle 25,000
- Consumer Price Index in 2025 (CPI2025\displaystyle \text{CPI}_{2025}) = 196\displaystyle 196
- Actual Revised Salary in 2025 = ₹ 37,250\displaystyle 37,250
2. **Calculate the required salary in 2025 to maintain the 2015 standard of living**:
Required Salary=Salary2015×CPI2025CPI2015\text{Required Salary} = \text{Salary}_{2015} \times \frac{\text{CPI}_{2025}}{\text{CPI}_{2015}}
Required Salary=25000×196125\text{Required Salary} = 25000 \times \frac{196}{125}
Since 25000125=200\displaystyle \frac{25000}{125} = 200, we have:
Required Salary=200×196=₹ 39,200\text{Required Salary} = 200 \times 196 = \text{₹ } 39,200
3. **Calculate the difference (additional amount needed)**:
Additional Amount=Required SalaryActual Salary in 2025\text{Additional Amount} = \text{Required Salary} - \text{Actual Salary in 2025}
Additional Amount=3920037250=₹ 1,950\text{Additional Amount} = 39200 - 37250 = \text{₹ } 1,950
Therefore, the employee should get an additional amount of ₹ 1,950\displaystyle 1,950 to maintain his previous standard of living.
Hence, **Option B** 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.

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