The monthly income of a person was ₹40,000. He used to save 25% of his income. His nominal income increases by 15% and his nominal expenditure increases by 20%. What is the percentage change in his nominal savings?
Show answer & explanation
Correct answer: B
Explanation
The correct answer is option 2 i.e. 0%
The monthly income of a person was 40,000. He used to save 25% of his income.
monthly income of a person initially = 40000
monthly savings of a person initially = 25% of 40000
= 25/100 × 40000
= 10000
monthly expenditure of a person initially = 40000 -10000
= 30000
His nominal income increases by 15% and his nominal expenditure increases by 20%.
monthly income of a person after increase = 40000 of (100 + 15)%
= 40000 of 115%
= 40000 × 115/100
= 46000
monthly expenditure of a person after increase = 30000 of (100 + 20)%
= 30000 of 120%
= 36000
monthly savings of a person after increase = 46000 - 36000
= 10000
Here the monthly savings of a person initially and after the increase in income is the same.
So the percentage change will be zero.
Percentage change in his nominal savings - (10000 - 10000/10000) × 100
= 0/10000 ×100
= 0