The monthly income of a person is ₹15,000. He saves 20% of his income. If his income increases by 10% and his nominal savings remains the same, then what will be his new expenditure?
Show answer & explanation
Correct answer: C
Explanation
The correct answer is option 3 i.e ₹13,500
The person's monthly savings are 20% of his monthly income:
20% of ₹15,000 = ₹3,000
So, the person's monthly expenditure is:
₹15,000 - ₹3,000 = ₹12,000
If his income increases by 10%, his new monthly income will be:
₹15,000 + (10% of ₹15,000) = ₹16,500
If his nominal savings remain the same, he will still be saving ₹3,000 per month. So, his new monthly expenditure will be:
₹16,500 - ₹3,000 = ₹13,500
Therefore, the person's new monthly expenditure will be ₹13,500.