UPSC Prelims 2010 · General Studies

Question 114: Basic Numeracy

The difference between the simple interest received from two banks on Rs. 500 for two years is Rs. 2·50. What is the difference between their rates ?

a0·25%

b0·5%

c1%

d2·5%

AnswerThe answer is (a).

Simple interest = principal x rate x time / 100. For Rs 500 over 2 years, each 1 per cent difference in rate changes the interest by 500 x 2 x 1 / 100 = Rs 10. A difference of Rs 2.50 is therefore a rate difference of 2.5 / 10 = 0.25 per cent. Remember: difference in rates = difference in interest x 100 / (principal x time).

Why each option is right or wrong

(a) Right: 0.25 per cent gives Rs 2.50 on Rs 500 in 2 years.
(b) 0.5 per cent would give Rs 5.
(c) 1 per cent would give Rs 10.
(d) 2.5 per cent would give Rs 25.

Explanation: written by UPSC Grade, not by UPSC.

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Source: UPSC, Civil Services (Preliminary) Examination 2010, General Studies, Series A. The paper on upsc.gov.in.