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Guy s net income equals his gross income minus his

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SVP
Joined: 14 Dec 2004
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Guy s net income equals his gross income minus his [#permalink]  30 Jan 2006, 17:34
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Guyâ€™s net income equals his gross income minus his deductions. By what percent did
Guyâ€™s net income change on January 1, 1989, when both his gross income and his
deductions increased?

(1) Guyâ€™s gross income increased by 4 percent on January 1, 1989.
(2) Guyâ€™s deductions increased by 15 percent on January 1, 1989.
Manager
Joined: 15 Aug 2005
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E.

We don't know the actual figures of any of the variables.
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Joined: 07 Jul 2004
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Net = gross - deductions

1) gross income up up by 4%. insufficient as we have no idea how much deductions went up
2) deductions up by 15%. Same reason as above. Insufficient.

Using 1) and 2):

If original gross income = g, deductions = d, then net = g - d

gross up by 4% -> 1.04g
net up by 15 percent -> 1.15d

Net net = 1.04g - 1.15d

Change in income = 1.04g - 1.15d - g + d = 0.04g - 0.15d

% change = (0.04g - 0.15d)/(g-d)

Now with different values of g and d, we will get different % change.

If we're not told what values, we won't know the % change.

Ans E
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Phew...

Me too arrived at 'E'. But OA given was C, I was wondersing what trick can be there? It's a simple question but OA made me think that it's "not that simple"
GMAT Club Legend
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vivek123 wrote:
Phew...

Me too arrived at 'E'. But OA given was C, I was wondersing what trick can be there? It's a simple question but OA made me think that it's "not that simple"

While working it, I thought C but I haven't though deeper into it yet... I'll think some more about it... (I have neck strain and it's killing me )

What's the source anyway?
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ywilfred wrote:
vivek123 wrote:
Phew...

Me too arrived at 'E'. But OA given was C, I was wondersing what trick can be there? It's a simple question but OA made me think that it's "not that simple"

While working it, I thought C but I haven't though deeper into it yet... I'll think some more about it... (I have neck strain and it's killing me )

What's the source anyway?

Hey Wilfred, looks like you are over working, take rest.
But I really appreciate your hard work. Working & also contributing to GMAT club

BTW, the source is GMAT sets (old ETS papers) but I have seen some OAs are wrong, so can't say that this OA is 100% correct!

Anyways, thanks a lot!
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wow, for once i did this exactly as ywilfred did !!!

But then I was disappointed to see that I didnt get the OA, lol .... i cant see what ive done wrong to end up with E though .... same expression that gives different numbers depending on the original income and deductions ..
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