The following table gives the monthly average salary of a teacher and general price indices for a period of six years.

Question: The following table gives the monthly average salary of a teacher and general price indices for a period of six years.

Year: 1980 1981 1982 1983 1984 1985
Income (Rs.): 360 420 500 550 600 640
General Price Index: 100 104 115 160 280 290
Find real average salary and construct real wage index based on 1980.

Solution: Computation of Real Income and Real Income Indices

YearIncome (Rs.)Price IndexReal IncomeReal Income Index
1980360100(360×100)/100 = 360.00100
1981420104(420×104)/100 = 403.80112.2
1982500115(500×115)/160 = 434.80120.8
1983550160(420×100)/160 = 343.8095.5
1984600280(420×100)/280 = 214.3059.5
1985640290(420×100)/290 = 220.7061.3