Question 62

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 remain the same, then what will be his new expenditure?

Solution

The monthly income of a person is ₹15,000. He saves 20% of his income.

Initial income = 15000

Initial savings = 15000 of 20%

= $$15000\times\frac{20}{100}$$

= 3000

If his income increases by 10% and his nominal savings remain the same,

Now income after increases = 15000 of (100+10)%

= 15000 of 110%

= $$15000\times\frac{110}{100}$$

= 16500

His new expenditure = 16500-3000

= 13500

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