During a certain period, the cost of living index number goes from 110 to 200 and the salary of a worker is also raised from ₹3630 to ₹5000. By how much amount he really gains or loses in real terms.
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → ₹ 800 lose
$\text{Real wage factor} = \frac{\text{New salary}}{\text{Old salary}} \times \frac{\text{Old index}}{\text{New index}}$
$= \frac{5000}{3630} \times \frac{110}{200}$
$= 1.377 \times 0.55$
$\approx 0.757$
$\text{Real income} = 3630 \times 0.757 \approx 2748$
$\text{Loss} = 3630 - 2748 = 882$
The worker incurs a loss of ₹882 in real terms.