Compute the index of real wages from the following data using 1983 as base year.

Question: Compute the index of real wages from the following data using 1983 as base year.

Year: 1980 1981 1982 1983 1984 1985
Average Monthly Wages (Rs.): 120 132 143 150 171 200
Price Index: 100 120 130 150 190 200

Solution: Computation of Real wage indices (Base 1983)

YearWages (Rs.)Price IndexReal WagesReal wages Index (Base = 1983)
1980120100(120×100)/100=120120
1981132120(130×104)/120=110110
1982143130(143×115)/130=110110
1983150150(150×100)/150=100100
1984171190(171×100)/190=9090
1985200200(200×100)/200=100100