Question: If the price of a book is increased by 20% and then decreased by 20%, what is the net change in the price?

Options:

1. 0%
2. 4%
3. 5%
4. 6%

Correct Answer: 5%

Solution:

Let the original price be $100. After a 20% increase, the price becomes $120. After a 20% decrease, the price becomes $120 - 0.20 × 120 = $96. The net change is (96 - 100)/100 × 100 = -4%.