Question

Suppose a business executive was earning Rs. 2,050 in the base period. What should be his
salary in the current period if his standard of living is to remain the same? Given EW = 25
and IW = 3544
(a)Rs. 2096
(b)Rs. 2106
(c)Rs. 2906
(d)Rs. 2306

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Answer 1

Answer:

The salary in the current period will be (c)Rs. 2906

Step-by-step explanation:

Given:

Base period earning = Rs. 2,050

EW = 25

IW = 3544

To find:

Salary in the current period =?

Solution:

It is given that the business executive was earning Rs. 2,050 in the base period. So, its price index number will be 100.

We know that the consumer price index is given by dividing IW by EW.

Consumer price index = IW/EW

Consumer price index = 3544/25

Consumer price index = 141.76

Let the salary in current period be x.

We know that Rs. 2,050 corresponds to a price index of 100 and Rs. x corresponds to a price index of 141.76

Therefore,

$x = \frac{141.76*2050}{100}$

$x = \frac{290608}{100}$

x = Rs. 2906.08

Therefore, his salary in the current period will be Rs. 2906 if his standard of living is to remain the same.

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