Shortcut Trick
Let Expenditure = 5 and Savings = 1 → Income = 6.
Income increase = 10% of 6 = 0.6.
Expenditure increase = 20% of 5 = 1.0.
Savings change = Income change − Expenditure change = 0.6 − 1.0 = −0.4.
Percentage change = (−0.4 / 1) × 100 = −40%.
∴ The correct option is D.
Alternate Method
Given:
Ratio of Expenditure to Savings = 5 ∶ 1
Increase in Income = 10%
Increase in Expenditure = 20%
Formula Used:
Income = Expenditure + Savings
Percentage Change = (New Value − Old Value) ÷ Old Value × 100
Initial: Income 600 (Ratio 5:1)
Expenditure: 500
Sav: 100
New: Income 660 (+10%), Exp 600 (+20%)
New Expenditure: 600
New Sav: 60
Savings Change: 100 → 60 (−40% = 0.4)
⇒ Let Savings = 100 and Expenditure = 500.
⇒ Total Income = 500 + 100 = 600.
⇒ New Income = 600 + (10% of 600) = 600 + 60 = 660.
⇒ New Expenditure = 500 + (20% of 500) = 500 + 100 = 600.
⇒ New Savings = New Income − New Expenditure = 660 − 600 = 60.
⇒ Change in Savings = 60 − 100 = −40.
⇒ Percentage change in Savings = (−40 ÷ 100) × 100 = −40%.
⇒ In decimal form, the change magnitude is 0.4.
∴ The correct option is D.
Additional Information
Income Identity
The fundamental relation is Income = Expenditure + Savings. Any change in two variables directly determines the third.
Percentage Change
Percentage change = (Difference ÷ Original Value) × 100. A negative result indicates a decrease.
Ratio Scaling
When dealing with ratios and percentages, scaling values to 100 or 1000 (e.g., 5:1 to 500:100) simplifies calculations significantly.