Index NumbersPYQ Sept 25Question 4199 of 197
All Questions

If the consumer price index number is 750, then the purchasing power of one rupee is _______.

Options

A12.5 paise
B15 paise
C13.3 paise
D16.5 paise
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Correct Answer

✅ Option c — 13.3 paise

All Options:

  • A12.5 paise
  • B15 paise
  • C13.3 paise
  • D16.5 paise

Detailed Solution & Explanation

Let us analyze the concept of purchasing power of money from first principles:
1. **Purchasing Power of Money**: Purchasing power is the value of money in terms of the amount of goods or services that one unit of money can buy. It is inversely proportional to the price level (Price Index):
Purchasing Power=1Consumer Price Index\text{Purchasing Power} = \frac{1}{\text{Consumer Price Index}}
2. **Convert to paise**: To find the purchasing power of one rupee in terms of paise (where ₹ 1=100\displaystyle 1 = 100 paise), we multiply the purchasing power by 100:
Purchasing Power (in paise)=1Consumer Price Index×100\text{Purchasing Power (in paise)} = \frac{1}{\text{Consumer Price Index}} \times 100
3. **Given Data**: CPI=750\displaystyle \text{CPI} = 750.
4. **Calculation**:
Purchasing Power=1750×100 paise\text{Purchasing Power} = \frac{1}{750} \times 100 \text{ paise}
Purchasing Power=100750 paise=1075 paise=215 paise≈0.1333 rupees=13.3 paise\text{Purchasing Power} = \frac{100}{750} \text{ paise} = \frac{10}{75} \text{ paise} = \frac{2}{15} \text{ paise} \approx 0.1333 \text{ rupees} = 13.3 \text{ paise}
Therefore, the purchasing power of one rupee is 13.3\displaystyle 13.3 paise.
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.

Key Concepts to Understand

Index Number

A statistical device for measuring changes in the magnitude of a group of related variables (like prices or production) over time.

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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

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