The monthly income of a person is ₹25,000. He spends 80% of his income and saves the rest. His nominal income and his nominal spending both increase by 10%. What will be his new savings?

₹5,500

Let initial income = 25000

Expenditure = 80% of 25000

= \(\frac{4}{5}\) × 25000

= 20000

Saving = 25000 - 20000 = 5000

New income = 25000 + \(\frac{1}{10}\)× 25000 = 27500

New expenditure = 20000 + \(\frac{1}{10}\)× 20000 = 22000

New Saving = 27500 - 22000 = 5500