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?

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

= $$\frac{25}{100}\times40000$$

= 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%

= $$40000\times\frac{115}{100}$$

= 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 = $$\frac{10000-10000}{10000}\times\ 100$$

= $$\frac{0}{10000}\times\ 100$$

= 0%