Q1 A shopkeeper raises a price by 20% and later cuts the new price by 20%. What is the overall change?
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A fall of 4%.
Multiply the factors rather than adding the percentages: 1.20 × 0.80 = 0.96, which is 4% below the original. The formula gives the same thing: 20 + (−20) + (20 × −20)/100 = −4. The cut is bigger in money terms than the rise because it is 20% of a larger number.