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Question
If the salary of a person in the base year is Rs 4,000 per annum and the current year salary is Rs 6,000, by how much should his salary be raised to maintain the same standard of living if the CPI is 400?
Solution
Base CPI = Rs 100
Current CPI = Rs 400
Base Year Salary = Rs 4,000
Current Year Salary = Rs 6,000
When Base CPI is Rs 100, then the salary is = Rs 4,000
When Base CPI is Rs 100, then the salary is = `(4,000)/100`
When the Current CPI is Rs 400, then the salary should be = `(4,000)/100 xx 400` = Rs 16,000
Thus, his salary should be Rs 16,000. Therefore, in the current year, his salary should increase by Rs 10,000 (i.e. Rs 16,000 - Rs 6,000) so as to maintain the same level of living in the current year as that of the base year.
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