A worker's salary was increased by 20%, and one year later reduced by 20%. How does the final salary compare to the original salary?

Answer and explanation

Correct answer: C. 4% lower

  1. Step 1: Let the original salary be 100.
  2. Step 2: After a 20% increase, the salary is 100 * 1.20 = 120.
  3. Step 3: After a 20% reduction, the salary is 120 (1 - 0.20) = 120 0.80 = 96.
  4. Step 4: Compare 96 to 100: 100 - 96 = 4% lower.
Answer
4% lower.
Why not the others: The same ignores that the 20% reduction is applied to a larger base value; 2% lower assumes half the loss; 4% higher reverses the direction of change.

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