Raman's income is ₹10,200. He saves 30% of his income. If his income increases by 14% and expenditure increases by 40%, then his savings will:
- AOption (a)
increase by ₹1,429
- BOption (b)
increase by ₹1,430
- COption (c)
decrease by ₹1,427
- DOption (d)
decrease by ₹1,428
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Correct answer
decrease by ₹1,428
Why this answer is correct
Shortcut Trick
Income = ₹10,200 | Savings = 30% = ₹3,060 | Expenditure = 70% = ₹7,140
Income Increase (+14%) = 10,200 × 0.14 = +₹1,428
Expenditure Increase (+40%) = 7,140 × 0.40 = +₹2,856
Change in Savings = Increase in Income − Increase in Expenditure = 1,428 − 2,856 = −₹1,428
∴ The correct answer is decrease by ₹1,428.
Alternate Method
Given: Initial Income = ₹10,200, Savings % = 30%
Formula Used: Income = Expenditure + Savings
⇒ Initial Savings = 30% of 10,200 = 0.30 × 10,200 = ₹3,060
⇒ Initial Expenditure = 10,200 − 3,060 = ₹7,140
⇒ New Income = 10,200 + 14% of 10,200 = 10,200 + 1,428 = ₹11,628
⇒ New Expenditure = 7,140 + 40% of 7,140 = 7,140 + 2,856 = ₹9,996
⇒ New Savings = 11,628 − 9,996 = ₹1,632
⇒ Change in Savings = 1,632 − 3,060 = −₹1,428
∴ The correct answer is decrease by ₹1,428.
Additional Information
Income-Expenditure Relationship
Always remember the fundamental equation: Income = Expenditure + Savings. Any percentage change in one side must balance the other.
Alligation Method for Savings
This problem can also be solved using alligation where the ratio of Expenditure to Savings is the inverse of the ratio of their respective percentage changes relative to the income change.
Successive Percentage Change
When a value increases by x% and then y%, the net change is given by (x + y + xy/100)%, though for split components like Income, direct calculation is safer.