Using 1991 as the base year, the cost of living index for 1996 is 160 and for 1997 is 180. The salary of an employee increased from R5000 in 1996 to R5500 in 1997. Find out whether the real income in 1997 has increased or decreased as compared to 1996 and if so by how much?. Also calculate purchasing power of the Rand in 1996 and 1997 as compared with 1991.

 Using 2002 as base year, the index numbers for the price of a commodity in 2003 and 2004 are 118 and 125. Calculate the index numbers for 2002 and 2004 if 2003 is taken as the base year

Answer rating: 100% (QA)

Lets start by calculating the real income in 1997 as compared ... View the full answer