If the Cost of Living Index rises by 10%, a wage earner's real income remains unchanged only if nominal wages increase by: MCQ with Answer and Explanation
If the Cost of Living Index rises by 10%, a wage earner's real income remains unchanged only if nominal wages increase by:
A. 5%
B. 20%
C. 15%
D. 10%
Answer: Option D
Solution (By JKSSB Mock Tests)
Real income = Nominal income / Price index. To keep real income constant when prices rise 10% (index ×1.10), nominal income must also rise 10% (×1.10), so the ratio remains unchanged.
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