The monthly income of a person is ₹25,000. He spends 80% of his income and saves the rest. His nominal income and his nominal spending both increased by 10%. What will be his new savings?

The monthly income of a person is ₹25,000.

monthly income of a person initially = ₹25,000

He spends 80% of his income and saves the rest.

expenditure of a person initially = 25000 of 80%

= $$25000\times\frac{80}{100}$$

= 20000

Saving of a person initially = 25000-20000 = ₹5000

His nominal income and his nominal spending both increased by 10%.

monthly income of a person after increase = 25000 of (100+10)%

= 25000 of 110%

= $$25000\times\frac{110}{100}$$

= ₹27500    Eq.(i)

expenditure of a person after an increase = 20000 of (100+10)%

= 20000 of 110%

= $$20000\times\frac{110}{100}$$

= ₹22000     Eq.(ii)

his new savings =  Eq.(i)- Eq.(ii)

= ₹27500-₹22000

= ₹5500