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During a certain period the cost of living index number goes up from 110 to 200 and the salary of a worker is also raised from Rs. 330 to Rs. 500. The worker does not get really gain. Then the real wages decreased by:
- a)Rs. 45.45
- b)Rs. 43.25
- c)Rs.100
- d)None of these
Correct answer is option 'C'. Can you explain this answer?
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Most Upvoted Answer
During a certain period the cost of living index number goes up from 1...
Calculation of Cost of Living Index
To calculate the change in real wages, we need to first calculate the change in the cost of living index. The given data shows that the cost of living index has increased from 110 to 200.
Change in Cost of Living Index = (New Index - Old Index) / Old Index * 100
= (200 - 110) / 110 * 100
= 81.82%
Calculation of Nominal Wages
Next, we need to calculate the nominal wages of the worker before and after the increase.
Nominal Wages Before = Rs. 330
Nominal Wages After = Rs. 500
Calculation of Real Wages
Real wages are the wages adjusted for inflation. To calculate the real wages, we need to adjust the nominal wages for the change in the cost of living index.
Real Wages Before = (Nominal Wages Before / Cost of Living Index Before) * 100
= (330 / 110) * 100
= Rs. 300
Real Wages After = (Nominal Wages After / Cost of Living Index After) * 100
= (500 / 200) * 100
= Rs. 250
Calculation of Change in Real Wages
The change in real wages is calculated as the difference between the real wages before and after the increase.
Change in Real Wages = Real Wages After - Real Wages Before
= Rs. 250 - Rs. 300
= - Rs. 50
The negative value indicates a decrease in real wages.
Conclusion
The calculation shows that the worker's real wages have decreased by Rs. 50. Since the increase in nominal wages is not enough to keep up with the increase in the cost of living index, the worker experiences a decrease in purchasing power.
To calculate the change in real wages, we need to first calculate the change in the cost of living index. The given data shows that the cost of living index has increased from 110 to 200.
Change in Cost of Living Index = (New Index - Old Index) / Old Index * 100
= (200 - 110) / 110 * 100
= 81.82%
Calculation of Nominal Wages
Next, we need to calculate the nominal wages of the worker before and after the increase.
Nominal Wages Before = Rs. 330
Nominal Wages After = Rs. 500
Calculation of Real Wages
Real wages are the wages adjusted for inflation. To calculate the real wages, we need to adjust the nominal wages for the change in the cost of living index.
Real Wages Before = (Nominal Wages Before / Cost of Living Index Before) * 100
= (330 / 110) * 100
= Rs. 300
Real Wages After = (Nominal Wages After / Cost of Living Index After) * 100
= (500 / 200) * 100
= Rs. 250
Calculation of Change in Real Wages
The change in real wages is calculated as the difference between the real wages before and after the increase.
Change in Real Wages = Real Wages After - Real Wages Before
= Rs. 250 - Rs. 300
= - Rs. 50
The negative value indicates a decrease in real wages.
Conclusion
The calculation shows that the worker's real wages have decreased by Rs. 50. Since the increase in nominal wages is not enough to keep up with the increase in the cost of living index, the worker experiences a decrease in purchasing power.
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Community Answer
During a certain period the cost of living index number goes up from 1...
Though the decrease in wages is Rs.100 but the decrease in real wages is Rs.50
According to me, the correct answer is D.
According to me, the correct answer is D.
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During a certain period the cost of living index number goes up from 110 to 200 and the salary of a worker is also raised from Rs. 330 to Rs. 500. The worker does not get really gain. Then the real wages decreased by:a)Rs. 45.45b)Rs. 43.25c)Rs.100d)None of theseCorrect answer is option 'C'. Can you explain this answer?
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During a certain period the cost of living index number goes up from 110 to 200 and the salary of a worker is also raised from Rs. 330 to Rs. 500. The worker does not get really gain. Then the real wages decreased by:a)Rs. 45.45b)Rs. 43.25c)Rs.100d)None of theseCorrect answer is option 'C'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about During a certain period the cost of living index number goes up from 110 to 200 and the salary of a worker is also raised from Rs. 330 to Rs. 500. The worker does not get really gain. Then the real wages decreased by:a)Rs. 45.45b)Rs. 43.25c)Rs.100d)None of theseCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for During a certain period the cost of living index number goes up from 110 to 200 and the salary of a worker is also raised from Rs. 330 to Rs. 500. The worker does not get really gain. Then the real wages decreased by:a)Rs. 45.45b)Rs. 43.25c)Rs.100d)None of theseCorrect answer is option 'C'. Can you explain this answer?.
During a certain period the cost of living index number goes up from 110 to 200 and the salary of a worker is also raised from Rs. 330 to Rs. 500. The worker does not get really gain. Then the real wages decreased by:a)Rs. 45.45b)Rs. 43.25c)Rs.100d)None of theseCorrect answer is option 'C'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about During a certain period the cost of living index number goes up from 110 to 200 and the salary of a worker is also raised from Rs. 330 to Rs. 500. The worker does not get really gain. Then the real wages decreased by:a)Rs. 45.45b)Rs. 43.25c)Rs.100d)None of theseCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for During a certain period the cost of living index number goes up from 110 to 200 and the salary of a worker is also raised from Rs. 330 to Rs. 500. The worker does not get really gain. Then the real wages decreased by:a)Rs. 45.45b)Rs. 43.25c)Rs.100d)None of theseCorrect answer is option 'C'. Can you explain this answer?.
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During a certain period the cost of living index number goes up from 110 to 200 and the salary of a worker is also raised from Rs. 330 to Rs. 500. The worker does not get really gain. Then the real wages decreased by:a)Rs. 45.45b)Rs. 43.25c)Rs.100d)None of theseCorrect answer is option 'C'. Can you explain this answer?, a detailed solution for During a certain period the cost of living index number goes up from 110 to 200 and the salary of a worker is also raised from Rs. 330 to Rs. 500. The worker does not get really gain. Then the real wages decreased by:a)Rs. 45.45b)Rs. 43.25c)Rs.100d)None of theseCorrect answer is option 'C'. Can you explain this answer? has been provided alongside types of During a certain period the cost of living index number goes up from 110 to 200 and the salary of a worker is also raised from Rs. 330 to Rs. 500. The worker does not get really gain. Then the real wages decreased by:a)Rs. 45.45b)Rs. 43.25c)Rs.100d)None of theseCorrect answer is option 'C'. Can you explain this answer? theory, EduRev gives you an
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