Purchasing Power of Money in 1960 compared to 1950

Introduction:
The purchasing power of money refers to the amount of goods and services that can be purchased with a certain amount of money. It is influenced by factors such as inflation, changes in prices, and the value of currency. In this case, we are given the price index for the year 1960 and the price index for the year 1950. Let's analyze how the purchasing power of money in rupees from 1950 will be affected in 1960.

Definition of Price Index:
A price index is a statistical measure that tracks the changes in the average price of a basket of goods and services over time. It is used to measure inflation and evaluate the purchasing power of a currency.

Price Index for 1960 and 1950:
- The price index for the year 1960 is given as 110.3.
- The price index for the year 1950 is given as 98.4.

Calculating the Change in Purchasing Power:
To calculate the change in purchasing power, we can use the formula:

Change in Purchasing Power = (Price Index in 1960 / Price Index in 1950) * 100

Substituting the given values into the formula:

Change in Purchasing Power = (110.3 / 98.4) * 100

Calculating the result:

Change in Purchasing Power = 112.12

Interpretation:
The calculated change in purchasing power is 112.12. This means that the purchasing power of money in rupees from 1950 will increase by approximately 12.12% in 1960. In other words, the same amount of money in rupees from 1950 will be able to buy more goods and services in 1960 due to the increase in purchasing power.

Conclusion:
The purchasing power of money in rupees from 1950 will increase by approximately 12.12% in 1960, as indicated by the calculated change in purchasing power. This means that individuals will be able to buy more goods and services with the same amount of money in 1960 compared to 1950.