All Exams >
CA Foundation >
Quantitative Aptitude for CA Foundation >
All Questions
All questions of Chapter 18: Index numbers for CA Foundation Exam
Index nos. show _________ changes rather than absolute amounts of change.- a)relative
- b)percentage
- c)both
- d)none
Correct answer is option 'B'. Can you explain this answer?
Index nos. show _________ changes rather than absolute amounts of change.
a)
relative
b)
percentage
c)
both
d)
none
|
Dhruv Mehra answered |
If you want to know what percent A is of B, you simple divide A by B, then take that number and move the decimal place two spaces to the right. That's your percentage! To use the calculator, enter two numbers to calculate the percentage the first is of the second by clicking Calculate Percentage.
From the following data
Q. The price index number for the year 1934 is :- a)140
- b)145
- c)147
- d)None of these.
Correct answer is option 'A'. Can you explain this answer?
From the following data
Q. The price index number for the year 1934 is :
a)
140
b)
145
c)
147
d)
None of these.
|
Naroj Boda answered |
ANSWER :- d
Solution :- Price Index = ΣP(Current area)/ΣP(Base Area) * 100
= (42/31)*100
= 135.48
If the 1970 index with base 1965 is 200 and 1965 index with base 1960 is 150, the index 1970 on base 1960 will be :- a)700
- b)300
- c)500
- d)600
Correct answer is option 'B'. Can you explain this answer?
If the 1970 index with base 1965 is 200 and 1965 index with base 1960 is 150, the index 1970 on base 1960 will be :
a)
700
b)
300
c)
500
d)
600
|
Freedom Institute answered |
Then 1965 index with base 1960 is 150
=> 1960 index = 100
the 1970 index with base 1965 is 200
=> 1965 index = 100
When 1965 index = 100 then 1970 index = 200
When 1965 index = 1 then 1970 index = 200/100
When 1965 index = 150 then 1970 index = (200/100) * 150 = 300
so 1970 index = 300 When 1960 index = 100
Hence the index 1970 on the base 1960 will be 300
From the following data with 1966 as base year
Q. The price per unit of commodity A in 1966 is- a)Rs. 5
- b)Rs. 6
- c)Rs. 4
- d)Rs. 12
Correct answer is option 'A'. Can you explain this answer?
From the following data with 1966 as base year
Q. The price per unit of commodity A in 1966 is
a)
Rs. 5
b)
Rs. 6
c)
Rs. 4
d)
Rs. 12
|
Shehna'z Lullabies answered |
Since they have given the base year as "1966" and they have given the data for "1966" it becomes easy .
according to the formula we will divide 500/100
according to the formula we will divide 500/100
The quantity Index number using Fisher’s formula satisfies :
- a)Unit Test
- b)Factor Reversal Test.
- c)Circular Test.
- d)Time Reversal Test.
Correct answer is option 'B,D'. Can you explain this answer?
The quantity Index number using Fisher’s formula satisfies :
a)
Unit Test
b)
Factor Reversal Test.
c)
Circular Test.
d)
Time Reversal Test.
|
Srsps answered |
Correct Answer :- d
Explanation : The time reversal test requires that the index for the later period based on the earlier period should be the reciprocal of that for the earlier period based on the later period; one of the desirable features of the “Fisher Ideal” price and volume indexes.
Fisher’s method satisfies both the time reversal test and factor reversal test. Hence it is called the ideal index number. Another test of the adequacy of the index number formula is what is known as ‘circular test’.
Fisher’s method satisfies both the time reversal test and factor reversal test. Hence it is called the ideal index number. Another test of the adequacy of the index number formula is what is known as ‘circular test’.
In 1996 the average price of a commodity was 20% more than in 1995 but 20% less than in 1994; and more over it was 50% more than in 1997 to price relatives using 1995 as base (1995 price relative 100) Reduce the data is:- a)150, 100, 120, 80 for (1994 - 97)
- b)135, 100, 125, 87, for (1994 - 97)
- c)140, 100, 120, 80 for (1994 - 97)
- d)None of these
Correct answer is option 'A'. Can you explain this answer?
In 1996 the average price of a commodity was 20% more than in 1995 but 20% less than in 1994; and more over it was 50% more than in 1997 to price relatives using 1995 as base (1995 price relative 100) Reduce the data is:
a)
150, 100, 120, 80 for (1994 - 97)
b)
135, 100, 125, 87, for (1994 - 97)
c)
140, 100, 120, 80 for (1994 - 97)
d)
None of these
|
|
Freedom Institute answered |
Let say 1975 Price = 100
1976 price = 100 + (20/100)100 = 120
20% less than 1974 = 120
=> 1974 Price * ( 1 - 0.2) = 120
=> 1974 Price = 150
50% more than 1977 = 120
=> 1977 price * ( 1 + 0.5) = 120
=> 1977 price = 80
1974 = 150
1975 = 100
1976 = 120
1977 = 80
Suppose a business excutive was earning Rs. 2,050 in the base period, what should be his salary in the current period if his standard of living is to remain the same ? Given ∑w = 25 and ∑IW = 3544:- a)Rs. 2096
- b)Rs. 2906
- c)Rs. 2106
- d)Rs. 2306
Correct answer is option 'B'. Can you explain this answer?
Suppose a business excutive was earning Rs. 2,050 in the base period, what should be his salary in the current period if his standard of living is to remain the same ? Given ∑w = 25 and ∑IW = 3544:
a)
Rs. 2096
b)
Rs. 2906
c)
Rs. 2106
d)
Rs. 2306
|
Rabiya Athar answered |
First he was earning RS 2050 in the base period whose price index number is 100 as we know. Then in the current year the consumer price index become 141.76 by dividing 3544 by 25. Then we can say that 2050---100 and x---141.7 then we calculate the value x=2050*141.7/100
If the index number of prices at a place in 1994 is 250 with 1984 as base year, then the prices have increased on average- a)250%
- b)150%
- c)350%
- d)None of these.
Correct answer is option 'B'. Can you explain this answer?
If the index number of prices at a place in 1994 is 250 with 1984 as base year, then the prices have increased on average
a)
250%
b)
150%
c)
350%
d)
None of these.
|
Sameer Rane answered |
Index number is a specialized average designed to measure the change in the level of an activity or item, either with respect to time or geographic location or some other characteristic. It is described either as a ratio or a percentage. For example, when we say that consumer price index for 1998 is 175 compared to 1991, it means that consumer prices have risen by 75% over these seven years.
Consumer price index number goes up from 110 to 200 and the Salary of a worker is also raised from Rs. 325 to Rs. 500. Therefore, in real terms he has not gain, to maintain his previous standard of living he should get an additional amount is :- a)Rs. 85
- b)Rs.90.91
- c)Rs. 98.25
- d)None of these
Correct answer is option 'B'. Can you explain this answer?
Consumer price index number goes up from 110 to 200 and the Salary of a worker is also raised from Rs. 325 to Rs. 500. Therefore, in real terms he has not gain, to maintain his previous standard of living he should get an additional amount is :
a)
Rs. 85
b)
Rs.90.91
c)
Rs. 98.25
d)
None of these
|
Alok Jayant answered |
Expenditure =325/110*100=295.4545
500/200*100=250
difference between them = 45.4545
additional amt= 45.4545*2
With the base year 1960 as the base the C. L. I. In 1972 stood at 250 x was getting a monthly Salary of Rs. 500 in 1960 and Rs. 750 in 1972. In 1972 to maintain his standard of living in 1960 x have received as extra allowances is- a)Rs. 600/-
- b)Rs. 500/-
- c)Rs. 300/-
- d)none of these.
Correct answer is option 'B'. Can you explain this answer?
With the base year 1960 as the base the C. L. I. In 1972 stood at 250 x was getting a monthly Salary of Rs. 500 in 1960 and Rs. 750 in 1972. In 1972 to maintain his standard of living in 1960 x have received as extra allowances is
a)
Rs. 600/-
b)
Rs. 500/-
c)
Rs. 300/-
d)
none of these.
|
Shubha .k answered |
The consumer price Index for April 1985 was 125. The food price index was 120 and other items index was 135. The percentage of the total weight of the index is- a)66.67
- b)68.28
- c)90.25
- d)None of these
Correct answer is option 'A'. Can you explain this answer?
The consumer price Index for April 1985 was 125. The food price index was 120 and other items index was 135. The percentage of the total weight of the index is
a)
66.67
b)
68.28
c)
90.25
d)
None of these
|
Atchaya Atchayaraja answered |
13500-12500=135x-120x
1000/15=x
Therefore the value of X IS 66.67.
1000/15=x
Therefore the value of X IS 66.67.
If ∑ Pnqn= 249, ∑ Poqo = 150, Paasche’s Index Number = 150 and Drobiseh and Bowely’s Index number = 145. Then the Fisher’s Ideal Index Number is- a)75
- b)60
- c)145.97
- d)None of these
Correct answer is option 'D'. Can you explain this answer?
If ∑ Pnq
n
= 249, ∑ Poqo = 150, Paasche’s Index Number = 150 and Drobiseh and Bowely’s Index number = 145. Then the Fisher’s Ideal Index Number isa)
75
b)
60
c)
145.97
d)
None of these
|
|
Rishika Goud answered |
Bowley index number=la+pa/2
145=La+150/2
La+150= 290
La=290_150
La =140
(Fishers index number)2= la×pa
(FIN)2=150×140
=21000
=144.913
145=La+150/2
La+150= 290
La=290_150
La =140
(Fishers index number)2= la×pa
(FIN)2=150×140
=21000
=144.913
Fisher’s Ideal Formula for calculating index nos. satisfies the _______ tests- a)Units Test
- b)Factor Reversal Test
- c)both
- d)none
Correct answer is option 'C'. Can you explain this answer?
Fisher’s Ideal Formula for calculating index nos. satisfies the _______ tests
a)
Units Test
b)
Factor Reversal Test
c)
both
d)
none
|
Pragati Shah answered |
Fishers Ideal Formula for calculating index numbers satisfies both Units Test and Factor Reversal Test. Let's understand both of these tests in detail:
Units Test:
The Units Test is also known as the test of consistency. The primary objective of this test is to ensure that the index number formula produces consistent results when the units of measurements of the variables change. In other words, if the units of measurement of the variables used in the index number formula are changed, the index number should not change. The Fisher's Ideal Formula satisfies this test as it is based on the concept of the geometric mean, which is a dimensionless quantity and does not depend on the units of measurement.
Factor Reversal Test:
The Factor Reversal Test is also known as the test of reversibility. The primary objective of this test is to ensure that if the original data of the variables are multiplied by a certain factor, the index number should also be multiplied by the same factor. In other words, the index number should be reversible. The Fisher's Ideal Formula also satisfies this test as it is based on the ratio of two geometric means, which is a homogeneous formula and satisfies the factor reversal property.
Therefore, we can conclude that Fisher's Ideal Formula for calculating index numbers satisfies both the Units Test and the Factor Reversal Test, making it a reliable and robust formula for calculating index numbers.
Units Test:
The Units Test is also known as the test of consistency. The primary objective of this test is to ensure that the index number formula produces consistent results when the units of measurements of the variables change. In other words, if the units of measurement of the variables used in the index number formula are changed, the index number should not change. The Fisher's Ideal Formula satisfies this test as it is based on the concept of the geometric mean, which is a dimensionless quantity and does not depend on the units of measurement.
Factor Reversal Test:
The Factor Reversal Test is also known as the test of reversibility. The primary objective of this test is to ensure that if the original data of the variables are multiplied by a certain factor, the index number should also be multiplied by the same factor. In other words, the index number should be reversible. The Fisher's Ideal Formula also satisfies this test as it is based on the ratio of two geometric means, which is a homogeneous formula and satisfies the factor reversal property.
Therefore, we can conclude that Fisher's Ideal Formula for calculating index numbers satisfies both the Units Test and the Factor Reversal Test, making it a reliable and robust formula for calculating index numbers.
The price of a commodity increases from Rs. 5 per unit in 1990 to Rs. 7.50 per unit in 1995 and the quantity consumed decreases from 120 units in 1990 to 90 units in 1995. The price and quantity in 1995 are 150% and 75% respectively of the corresponding price and quantity in 1990. Therefore, the product of the price ratio and quantity ratio is:- a)1.8
- b)1.125
- c)1.75
- d)None of these
Correct answer is option 'B'. Can you explain this answer?
The price of a commodity increases from Rs. 5 per unit in 1990 to Rs. 7.50 per unit in 1995 and the quantity consumed decreases from 120 units in 1990 to 90 units in 1995. The price and quantity in 1995 are 150% and 75% respectively of the corresponding price and quantity in 1990. Therefore, the product of the price ratio and quantity ratio is:
a)
1.8
b)
1.125
c)
1.75
d)
None of these
|
Ritika Iyer answered |
Given data:
Price in 1990 = Rs. 5 per unit
Price in 1995 = Rs. 7.50 per unit
Quantity in 1990 = 120 units
Quantity in 1995 = 90 units
Price ratio = (Price in 1995 / Price in 1990) * 100%
= (7.50 / 5) * 100%
= 150%
Quantity ratio = (Quantity in 1995 / Quantity in 1990) * 100%
= (90 / 120) * 100%
= 75%
Product of price ratio and quantity ratio = (150% * 75%) / 100%
= 1.125
Therefore, the correct answer is option B) 1.125.
Explanation:
In 1990, the price of the commodity was Rs. 5 per unit and the quantity consumed was 120 units. In 1995, the price increased to Rs. 7.50 per unit and the quantity consumed decreased to 90 units. This means that there was an increase in price and a decrease in quantity consumed over the time period of 1990 to 1995. To calculate the price ratio and quantity ratio, we divide the values of 1995 by the values of 1990 and multiply by 100% to get the percentage increase or decrease. The product of the price ratio and quantity ratio gives us the overall change in the commodity over the time period of 1990 to 1995. In this case, the product is 1.125, which means that there was an overall decrease in the commodity of 12.5%.
Price in 1990 = Rs. 5 per unit
Price in 1995 = Rs. 7.50 per unit
Quantity in 1990 = 120 units
Quantity in 1995 = 90 units
Price ratio = (Price in 1995 / Price in 1990) * 100%
= (7.50 / 5) * 100%
= 150%
Quantity ratio = (Quantity in 1995 / Quantity in 1990) * 100%
= (90 / 120) * 100%
= 75%
Product of price ratio and quantity ratio = (150% * 75%) / 100%
= 1.125
Therefore, the correct answer is option B) 1.125.
Explanation:
In 1990, the price of the commodity was Rs. 5 per unit and the quantity consumed was 120 units. In 1995, the price increased to Rs. 7.50 per unit and the quantity consumed decreased to 90 units. This means that there was an increase in price and a decrease in quantity consumed over the time period of 1990 to 1995. To calculate the price ratio and quantity ratio, we divide the values of 1995 by the values of 1990 and multiply by 100% to get the percentage increase or decrease. The product of the price ratio and quantity ratio gives us the overall change in the commodity over the time period of 1990 to 1995. In this case, the product is 1.125, which means that there was an overall decrease in the commodity of 12.5%.
If the prices of all commodities in a place have decreased 35% over the base period prices, then the index number of prices of that place is now- a)35
- b)135
- c)65
- d)None of these.
Correct answer is option 'C'. Can you explain this answer?
If the prices of all commodities in a place have decreased 35% over the base period prices, then the index number of prices of that place is now
a)
35
b)
135
c)
65
d)
None of these.
|
Janhavi Basu answered |
Explanation:
An index number is a statistical measure that shows changes in a variable or group of variables over time. In this case, we are looking at the price index of a particular place.
The formula for calculating the price index is as follows:
Price index = (Current year prices / Base year prices) x 100
Given that the prices of all commodities in a place have decreased 35% over the base period prices, we can assume that the current year prices are 65% of the base year prices. Therefore, we can calculate the price index as follows:
Price index = (65 / 100) x 100
Price index = 65
Therefore, the correct answer is option C, 65.
Conclusion:
The price index is a measure of the average change in prices over time. In this case, the prices of all commodities in a place have decreased 35% over the base period prices, resulting in a price index of 65.
An index number is a statistical measure that shows changes in a variable or group of variables over time. In this case, we are looking at the price index of a particular place.
The formula for calculating the price index is as follows:
Price index = (Current year prices / Base year prices) x 100
Given that the prices of all commodities in a place have decreased 35% over the base period prices, we can assume that the current year prices are 65% of the base year prices. Therefore, we can calculate the price index as follows:
Price index = (65 / 100) x 100
Price index = 65
Therefore, the correct answer is option C, 65.
Conclusion:
The price index is a measure of the average change in prices over time. In this case, the prices of all commodities in a place have decreased 35% over the base period prices, resulting in a price index of 65.
The price level of a country in a certain year has increased 25% over the base period.The index number is
- a)25
- b)125
- c)225
- d)2500
Correct answer is option 'B'. Can you explain this answer?
The price level of a country in a certain year has increased 25% over the base period.The index number is
a)
25
b)
125
c)
225
d)
2500
|
|
Freedom Institute answered |
2. 125
Explanation:
An index number is a measure of how much a quantity, such as a price level, has changed relative to a base period. When the price level increases by 25% over the base period, the index number is calculated as follows:
Index Number=100+Percentage Increase
In this case:
Index Number=100+25=125
So, the index number is 125.
The total value of retained imports into India in 1960 was Rs. 71.5 million per month. The corresponding total for 1967 was Rs. 87.6 million per month. The index of volume of retained inports in 1967 composed with 1960( =100) was 62.0. The price index for retained inputs for 1967 our 1960 as base is - a)198.61
- b)197.61
- c)198.25
- d)None of these
Correct answer is option 'B'. Can you explain this answer?
The total value of retained imports into India in 1960 was Rs. 71.5 million per month. The corresponding total for 1967 was Rs. 87.6 million per month. The index of volume of retained inports in 1967 composed with 1960( =100) was 62.0. The price index for retained inputs for 1967 our 1960 as base is
a)
198.61
b)
197.61
c)
198.25
d)
None of these
|
Vivek Vivek answered |
Here value means price×quantity .
quantity is considered as volume .
value index=price index×quantity index(without 100)
(87.6 million/71.5 million)×100 =price index ×(62/100)
price index =
quantity is considered as volume .
value index=price index×quantity index(without 100)
(87.6 million/71.5 million)×100 =price index ×(62/100)
price index =
If å PoQo = 1360, å PnQo = 1900, å PoQn = 1344, å PoQn = 1880 then the Laspeyre’s Index number is- a)0.71
- b)1.39
- c)1.75
- d)None of these
Correct answer is option 'B'. Can you explain this answer?
If å PoQo = 1360, å PnQo = 1900, å PoQn = 1344, å PoQn = 1880 then the Laspeyre’s Index number is
a)
0.71
b)
1.39
c)
1.75
d)
None of these
|
Charvi Roy answered |
Given Data:
PoQo = 1360
PnQo = 1900
PoQn = 1344
PnQn = 1880
To find: Laspeyres Index Number
Formula: Laspeyres Index Number = (Current Year Quantity * Base Year Price) / (Base Year Quantity * Base Year Price) * 100
Calculation:
Base Year Quantity = PoQo = 1360
Base Year Price = Average of PoQo and PoQn = (1360 + 1344) / 2 = 1352
Current Year Quantity = PnQo = 1900
Current Year Price = Average of PnQo and PnQn = (1900 + 1880) / 2 = 1890
Laspeyres Index Number = (1900 * 1352) / (1360 * 1352) * 100 = 139
Therefore, the Laspeyres Index Number is 1.39 (Option B).
PoQo = 1360
PnQo = 1900
PoQn = 1344
PnQn = 1880
To find: Laspeyres Index Number
Formula: Laspeyres Index Number = (Current Year Quantity * Base Year Price) / (Base Year Quantity * Base Year Price) * 100
Calculation:
Base Year Quantity = PoQo = 1360
Base Year Price = Average of PoQo and PoQn = (1360 + 1344) / 2 = 1352
Current Year Quantity = PnQo = 1900
Current Year Price = Average of PnQo and PnQn = (1900 + 1880) / 2 = 1890
Laspeyres Index Number = (1900 * 1352) / (1360 * 1352) * 100 = 139
Therefore, the Laspeyres Index Number is 1.39 (Option B).
The ________ makes index nos. time-reversible.- a)A.M.
- b)G.M.
- c)H.M.
- d)none
Correct answer is option 'B'. Can you explain this answer?
The ________ makes index nos. time-reversible.
a)
A.M.
b)
G.M.
c)
H.M.
d)
none
|
Madhavan Malik answered |
The Geometric Mean (G.M) makes index numbers time-reversible. This can be explained as follows:
Index numbers are used to measure changes in the level of a certain phenomenon over time. For example, the Consumer Price Index (CPI) measures the changes in the prices of goods and services over time. The index number is calculated by taking the ratio of the current value of the phenomenon to its value in a base period and multiplying it by 100.
One of the important properties of an index number is its time-reversibility. This means that if we reverse the time series, the resulting index number should be the reciprocal of the original index number. For example, if the index number for year 2 relative to year 1 is 120, then the index number for year 1 relative to year 2 should be 1/1.2 = 0.8333.
The Geometric Mean formula for calculating index numbers has the property of time-reversibility. The formula for the index number is:
Index Number = (Product of (Current Value/Base Value)^(1/n)) x 100
where n is the number of periods.
The Geometric Mean formula uses the product of the ratios of current value to base value raised to the power of 1/n. This formula has the property that if we reverse the time series, the resulting index number is the reciprocal of the original index number. Therefore, the Geometric Mean formula is said to be time-reversible.
In contrast, the Arithmetic Mean (A.M) and Harmonic Mean (H.M) formulas for calculating index numbers do not have the property of time-reversibility. Therefore, they cannot be used to calculate time-reversible index numbers.
Hence, the Geometric Mean formula is the preferred method for calculating index numbers as it has the property of time-reversibility.
Index numbers are used to measure changes in the level of a certain phenomenon over time. For example, the Consumer Price Index (CPI) measures the changes in the prices of goods and services over time. The index number is calculated by taking the ratio of the current value of the phenomenon to its value in a base period and multiplying it by 100.
One of the important properties of an index number is its time-reversibility. This means that if we reverse the time series, the resulting index number should be the reciprocal of the original index number. For example, if the index number for year 2 relative to year 1 is 120, then the index number for year 1 relative to year 2 should be 1/1.2 = 0.8333.
The Geometric Mean formula for calculating index numbers has the property of time-reversibility. The formula for the index number is:
Index Number = (Product of (Current Value/Base Value)^(1/n)) x 100
where n is the number of periods.
The Geometric Mean formula uses the product of the ratios of current value to base value raised to the power of 1/n. This formula has the property that if we reverse the time series, the resulting index number is the reciprocal of the original index number. Therefore, the Geometric Mean formula is said to be time-reversible.
In contrast, the Arithmetic Mean (A.M) and Harmonic Mean (H.M) formulas for calculating index numbers do not have the property of time-reversibility. Therefore, they cannot be used to calculate time-reversible index numbers.
Hence, the Geometric Mean formula is the preferred method for calculating index numbers as it has the property of time-reversibility.
The ________ of group indices given the General Index- a)H.M.
- b)G.M.
- c)A.M.
- d)none
Correct answer is option 'C'. Can you explain this answer?
The ________ of group indices given the General Index
a)
H.M.
b)
G.M.
c)
A.M.
d)
none
|
|
Muskaan Tiwari answered |
The Average Index of group indices given the General Index
The question is asking for the average index of group indices given the general index. This can be calculated using the formula for the arithmetic mean, which is the sum of all the values divided by the number of values.
Formula: Average Index = Sum of group indices / Number of group indices
In this case, the group indices are given and the number of group indices is not specified. Therefore, we can assume that there are multiple group indices.
The answer to the question is option C, which is the arithmetic mean or the average index (A.M.) of the group indices.
HTML bullet points:
- The formula for the arithmetic mean is the sum of all the values divided by the number of values.
- To calculate the average index of group indices given the general index, we need to use the formula: Average Index = Sum of group indices / Number of group indices.
- The answer to the question is option C, which is the arithmetic mean or the average index (A.M.) of the group indices.
The question is asking for the average index of group indices given the general index. This can be calculated using the formula for the arithmetic mean, which is the sum of all the values divided by the number of values.
Formula: Average Index = Sum of group indices / Number of group indices
In this case, the group indices are given and the number of group indices is not specified. Therefore, we can assume that there are multiple group indices.
The answer to the question is option C, which is the arithmetic mean or the average index (A.M.) of the group indices.
HTML bullet points:
- The formula for the arithmetic mean is the sum of all the values divided by the number of values.
- To calculate the average index of group indices given the general index, we need to use the formula: Average Index = Sum of group indices / Number of group indices.
- The answer to the question is option C, which is the arithmetic mean or the average index (A.M.) of the group indices.
If the prices of all commodities in a place have increased 1.25 times in comparison to the base period, the index number of prices of that place is now- a)125
- b)150
- c)225
- d)None of these
Correct answer is option 'C'. Can you explain this answer?
If the prices of all commodities in a place have increased 1.25 times in comparison to the base period, the index number of prices of that place is now
a)
125
b)
150
c)
225
d)
None of these
|
|
Sahil Malik answered |
According to the question, Given : P1 = P0 + 1.25 P0
P1 = 2.25 P0
In index numbers, we assume base price P0 = 100
P1 = 2.25 ( 100)
P1 = 225
Price of that place = 225
P1 = 2.25 P0
In index numbers, we assume base price P0 = 100
P1 = 2.25 ( 100)
P1 = 225
Price of that place = 225
The price of a number of commodities are given below in the current year 1975 and base year 1970.
Q. For 1975 with base 1970 by the Method of price relatives using Geometrical mean. The price index is :- a)125.3
- b)124.3
- c)128.8
- d)None of these
Correct answer is option 'B'. Can you explain this answer?
The price of a number of commodities are given below in the current year 1975 and base year 1970.
Q. For 1975 with base 1970 by the Method of price relatives using Geometrical mean. The price index is :
a)
125.3
b)
124.3
c)
128.8
d)
None of these
|
Deendayal Mundra answered |
Log(P)=2+1/£log(p1/p0).
Log(P)=2+1/6[(log55/45)+(log70/60)+(log30/20)+(log75/80)+(log90/85)+(log130/120).
Log(P)=2+1/6(log3.680)
Log(P)=2.094
P=Antlog(2.094)
P=124.
Log(P)=2+1/6[(log55/45)+(log70/60)+(log30/20)+(log75/80)+(log90/85)+(log130/120).
Log(P)=2+1/6(log3.680)
Log(P)=2.094
P=Antlog(2.094)
P=124.
The cost of living Index (C.L.I.) is always :- a)Weighted index
- b)Price Index.
- c)Quantity Index.
- d)None of these.
Correct answer is option 'A'. Can you explain this answer?
The cost of living Index (C.L.I.) is always :
a)
Weighted index
b)
Price Index.
c)
Quantity Index.
d)
None of these.
|
|
Hrishikesh Mukherjee answered |
Cost of Living Index (C.L.I.) - Weighted Index
Cost of living index (C.L.I.) is a statistical measure that compares the cost of living between different geographical areas or time periods. It is a weighted index that takes into account the relative importance of different goods and services in a typical household's budget.
Calculation of C.L.I.
The cost of living index is calculated as follows:
C.L.I. = (Cost of basket in the current period / Cost of basket in the base period) x 100
Here, the "basket" refers to a collection of goods and services that are typical of a household's consumption patterns. The base period is usually chosen as a reference period against which to compare the current period.
Weighted Index
The cost of living index is a weighted index because it takes into account the relative importance of different goods and services in a typical household's budget. The weights are usually derived from household expenditure surveys, which provide information on the proportion of income that is spent on different items.
For example, if housing costs represent 30% of a typical household's budget, then housing would be given a weight of 30% in the cost of living index. Similarly, if food and beverages represent 20% of the budget, then this category would be given a weight of 20%.
Importance of C.L.I.
The cost of living index is an important tool for policymakers, businesses, and individuals. It can be used to:
- Determine the relative cost of living between different geographical areas or time periods
- Adjust wages, salaries, and benefits to reflect changes in the cost of living
- Set prices for goods and services
- Determine the level of government benefits, such as social security and welfare payments
- Make investment decisions
Conclusion
In conclusion, the cost of living index is a weighted index that takes into account the relative importance of different goods and services in a typical household's budget. It is an important tool for policymakers, businesses, and individuals to determine the relative cost of living between different geographical areas or time periods.
Cost of living index (C.L.I.) is a statistical measure that compares the cost of living between different geographical areas or time periods. It is a weighted index that takes into account the relative importance of different goods and services in a typical household's budget.
Calculation of C.L.I.
The cost of living index is calculated as follows:
C.L.I. = (Cost of basket in the current period / Cost of basket in the base period) x 100
Here, the "basket" refers to a collection of goods and services that are typical of a household's consumption patterns. The base period is usually chosen as a reference period against which to compare the current period.
Weighted Index
The cost of living index is a weighted index because it takes into account the relative importance of different goods and services in a typical household's budget. The weights are usually derived from household expenditure surveys, which provide information on the proportion of income that is spent on different items.
For example, if housing costs represent 30% of a typical household's budget, then housing would be given a weight of 30% in the cost of living index. Similarly, if food and beverages represent 20% of the budget, then this category would be given a weight of 20%.
Importance of C.L.I.
The cost of living index is an important tool for policymakers, businesses, and individuals. It can be used to:
- Determine the relative cost of living between different geographical areas or time periods
- Adjust wages, salaries, and benefits to reflect changes in the cost of living
- Set prices for goods and services
- Determine the level of government benefits, such as social security and welfare payments
- Make investment decisions
Conclusion
In conclusion, the cost of living index is a weighted index that takes into account the relative importance of different goods and services in a typical household's budget. It is an important tool for policymakers, businesses, and individuals to determine the relative cost of living between different geographical areas or time periods.
Which among the following statements is INCORRECT?- a)Coefficient of correlation can be computed directly from the data without measuring deviation.
- b)Measures of Dispersion are also called averages of the second order.
- c)Standard deviation can be negative.
- d)Mean deviation can never be negative.
Correct answer is option 'C'. Can you explain this answer?
Which among the following statements is INCORRECT?
a)
Coefficient of correlation can be computed directly from the data without measuring deviation.
b)
Measures of Dispersion are also called averages of the second order.
c)
Standard deviation can be negative.
d)
Mean deviation can never be negative.
|
Poonam Reddy answered |
No, standard deviation is always positive or 0. When you square deviations from the mean, they become positive or zero. Their sum is still positive or zero and the quotient after dividing the sum by n – 1 stays positive or zero. This final quantity is the variance.
“Fisher’s Ideal Index is the only formula which satisfies”
- a)Time Reversal Test
- b)Circular Test
- c)Factor Reversal Test
- d)None of these
Correct answer is option 'A,C'. Can you explain this answer?
“Fisher’s Ideal Index is the only formula which satisfies”
a)
Time Reversal Test
b)
Circular Test
c)
Factor Reversal Test
d)
None of these
|
Keshav answered |
Correct answer is a and c.
Time Reversal Test and Factor Reversal TestCircular test is satisfied by:
- a)Simple aggregative method
- b)Paasche’s index number
- c)Fisher’s ideal index
- d)Laspeyres Index
Correct answer is option 'A'. Can you explain this answer?
Circular test is satisfied by:
a)
Simple aggregative method
b)
Paasche’s index number
c)
Fisher’s ideal index
d)
Laspeyres Index
|
|
Freedom Institute answered |
Fisher's Ideal volume index is the geometric mean of the Laspeyres and Paasche volume indices. Context: A measure of change in volume from period to period. It is calculated as the geometric mean of a chain Paasche volume index and a chain Laspeyres volume index.
If the prices of all commodities in a place have increased 1.25 times in comparison to the base period, the index number of prices of that place now is- a)125
- b)150
- c)225
- d)None of these.
Correct answer is option 'C'. Can you explain this answer?
If the prices of all commodities in a place have increased 1.25 times in comparison to the base period, the index number of prices of that place now is
a)
125
b)
150
c)
225
d)
None of these.
|
|
Raghavendra Choudhury answered |
Calculation of Index Number of Prices:
The index number of prices is a measure of the average price level of goods and services in a particular place or country. It is calculated by comparing the prices of goods and services in the current period with a base period.
Given that the prices of all commodities in a place have increased 1.25 times in comparison to the base period, we need to calculate the index number of prices for the current period.
Formula:
Index Number of Prices = (Price in the Current Period / Price in the Base Period) x 100
Calculation:
Let's assume that the price of a commodity in the base period was Rs. 100.
As per the given condition, the price of the same commodity in the current period is Rs. 125 (1.25 times the base period price).
Using the formula mentioned above, we can calculate the index number of prices as follows:
Index Number of Prices = (Price in the Current Period / Price in the Base Period) x 100
= (125 / 100) x 100
= 125
Therefore, the correct option is (c) 225.
Conclusion:
Hence, we can conclude that the index number of prices for the current period when the prices of all commodities in a place have increased 1.25 times in comparison to the base period is 125.
The index number of prices is a measure of the average price level of goods and services in a particular place or country. It is calculated by comparing the prices of goods and services in the current period with a base period.
Given that the prices of all commodities in a place have increased 1.25 times in comparison to the base period, we need to calculate the index number of prices for the current period.
Formula:
Index Number of Prices = (Price in the Current Period / Price in the Base Period) x 100
Calculation:
Let's assume that the price of a commodity in the base period was Rs. 100.
As per the given condition, the price of the same commodity in the current period is Rs. 125 (1.25 times the base period price).
Using the formula mentioned above, we can calculate the index number of prices as follows:
Index Number of Prices = (Price in the Current Period / Price in the Base Period) x 100
= (125 / 100) x 100
= 125
Therefore, the correct option is (c) 225.
Conclusion:
Hence, we can conclude that the index number of prices for the current period when the prices of all commodities in a place have increased 1.25 times in comparison to the base period is 125.
If the price of all commodities in a place have increased 1.25 times in comparison to the base period prices, then the index number of prices for the place is now
- a)100
- b)125
- c)225
- d)None of the above.
Correct answer is option 'C'. Can you explain this answer?
If the price of all commodities in a place have increased 1.25 times in comparison to the base period prices, then the index number of prices for the place is now
a)
100
b)
125
c)
225
d)
None of the above.
|
Muskan Singh answered |
We can assume base price as 100.
Hence 100+125 = 225.
Hence 100+125 = 225.
If the price index for the year, say 1960 be 110.3 and the price index for the year, say 1950 be 98.4, then the purchasing power of money (Rupees) of 1950 will in 1960 is - a)Rs. 1.12
- b)Rs. 1.25
- c)Rs. 1.37
- d)None of these.
Correct answer is option 'A'. Can you explain this answer?
If the price index for the year, say 1960 be 110.3 and the price index for the year, say 1950 be 98.4, then the purchasing power of money (Rupees) of 1950 will in 1960 is
a)
Rs. 1.12
b)
Rs. 1.25
c)
Rs. 1.37
d)
None of these.
|
Kalyan Ghoshal answered |
Explanation:
To calculate the purchasing power of money in 1960 compared to 1950, we need to find the ratio of the price indices.
Step 1: Calculate the ratio of the price indices:
Price index ratio = Price index of 1960 / Price index of 1950
= 110.3 / 98.4
= 1.12
Step 2: The ratio obtained in Step 1 represents the change in the general price level from 1950 to 1960. Therefore, it can also be considered as the change in the purchasing power of money.
Hence, the purchasing power of money in 1960 compared to 1950 is 1.12 times, or Rs. 1.12.
Additional Information:
Price Index:
A price index is a measure of the average price level of goods and services in an economy over a period of time. It is calculated by taking the price of a basket of goods and services in a particular year (base year) and comparing it to the price of the same basket of goods and services in other years.
Purchasing Power of Money:
Purchasing power of money refers to the amount of goods and services that can be obtained with a given amount of money. It is influenced by the general price level in the economy. If prices increase, the purchasing power of money decreases, and vice versa.
To calculate the purchasing power of money in 1960 compared to 1950, we need to find the ratio of the price indices.
Step 1: Calculate the ratio of the price indices:
Price index ratio = Price index of 1960 / Price index of 1950
= 110.3 / 98.4
= 1.12
Step 2: The ratio obtained in Step 1 represents the change in the general price level from 1950 to 1960. Therefore, it can also be considered as the change in the purchasing power of money.
Hence, the purchasing power of money in 1960 compared to 1950 is 1.12 times, or Rs. 1.12.
Additional Information:
Price Index:
A price index is a measure of the average price level of goods and services in an economy over a period of time. It is calculated by taking the price of a basket of goods and services in a particular year (base year) and comparing it to the price of the same basket of goods and services in other years.
Purchasing Power of Money:
Purchasing power of money refers to the amount of goods and services that can be obtained with a given amount of money. It is influenced by the general price level in the economy. If prices increase, the purchasing power of money decreases, and vice versa.
The prices of a commodity in the years 1975 and 1980 were 25 and 30 respectively, taking 1975 as base year the price relative is :- a)120
- b)135
- c)122
- d)None of these
Correct answer is option 'A'. Can you explain this answer?
The prices of a commodity in the years 1975 and 1980 were 25 and 30 respectively, taking 1975 as base year the price relative is :
a)
120
b)
135
c)
122
d)
None of these
|
|
Sonal Patel answered |
Price Relative Calculation:
Price relative is a measure used to compare the price of a commodity in two different years with the help of a base year. It is calculated as follows:
Price relative = (Price in the given year / Price in the base year) x 100
Given:
Price of commodity in 1975 = 25
Price of commodity in 1980 = 30
Base year = 1975
Calculation:
Price relative = (Price in 1980 / Price in 1975) x 100
= (30 / 25) x 100
= 1.2 x 100
= 120
Therefore, the price relative is 120.
Conclusion:
The correct answer is option A (120). The price relative of the commodity in 1980, taking 1975 as a base year, is 120.
Price relative is a measure used to compare the price of a commodity in two different years with the help of a base year. It is calculated as follows:
Price relative = (Price in the given year / Price in the base year) x 100
Given:
Price of commodity in 1975 = 25
Price of commodity in 1980 = 30
Base year = 1975
Calculation:
Price relative = (Price in 1980 / Price in 1975) x 100
= (30 / 25) x 100
= 1.2 x 100
= 120
Therefore, the price relative is 120.
Conclusion:
The correct answer is option A (120). The price relative of the commodity in 1980, taking 1975 as a base year, is 120.
The Bowley’s Price index number is represented in terms of :- a)A.M. of Laspeyre’s and Paasche’s Price index number.
- b)G.M. of Laspeyre’s and Paasche’s Price index number.
- c)A.M. of Laspeyre’s and Walsh’s price index number.
- d)None of these.
Correct answer is option 'A'. Can you explain this answer?
The Bowley’s Price index number is represented in terms of :
a)
A.M. of Laspeyre’s and Paasche’s Price index number.
b)
G.M. of Laspeyre’s and Paasche’s Price index number.
c)
A.M. of Laspeyre’s and Walsh’s price index number.
d)
None of these.
|
|
Janhavi Basu answered |
Explanation:
Bowleys Price Index number is represented in terms of the arithmetic mean of Laspeyres and Paasches price index numbers. Let's understand what Laspeyres and Paasches price index numbers are.
Laspeyres Price Index Number:
The Laspeyres price index number measures the change in the price of a fixed basket of goods and services over time. It is calculated by taking the ratio of the cost of the basket of goods and services in the current year to the cost of the same basket of goods and services in the base year. The Laspeyres price index number overestimates the cost of living because it does not take into account the substitution effect.
Paasches Price Index Number:
The Paasches price index number measures the change in the price of a variable basket of goods and services over time. It is calculated by taking the ratio of the cost of the basket of goods and services in the current year to the cost of the same basket of goods and services in the base year. The Paasches price index number underestimates the cost of living because it does not take into account the income effect.
Bowleys Price Index Number:
Bowleys Price Index Number is the arithmetic mean of Laspeyres and Paasches price index numbers. It overcomes the limitations of both Laspeyres and Paasches price index numbers because it takes into account the substitution effect as well as the income effect.
Conclusion:
Thus, the correct answer is option 'A' - Bowleys Price index number is represented in terms of A.M. of Laspeyres and Paasches Price index number.
Bowleys Price Index number is represented in terms of the arithmetic mean of Laspeyres and Paasches price index numbers. Let's understand what Laspeyres and Paasches price index numbers are.
Laspeyres Price Index Number:
The Laspeyres price index number measures the change in the price of a fixed basket of goods and services over time. It is calculated by taking the ratio of the cost of the basket of goods and services in the current year to the cost of the same basket of goods and services in the base year. The Laspeyres price index number overestimates the cost of living because it does not take into account the substitution effect.
Paasches Price Index Number:
The Paasches price index number measures the change in the price of a variable basket of goods and services over time. It is calculated by taking the ratio of the cost of the basket of goods and services in the current year to the cost of the same basket of goods and services in the base year. The Paasches price index number underestimates the cost of living because it does not take into account the income effect.
Bowleys Price Index Number:
Bowleys Price Index Number is the arithmetic mean of Laspeyres and Paasches price index numbers. It overcomes the limitations of both Laspeyres and Paasches price index numbers because it takes into account the substitution effect as well as the income effect.
Conclusion:
Thus, the correct answer is option 'A' - Bowleys Price index number is represented in terms of A.M. of Laspeyres and Paasches Price index number.
Given below are the date on prices of some consumer goods and the weights attached to the various items Compute price index number for the year 1985 (Base 1984 = 100)
Q. Then weighted average of price Relative Index is : - a)125.43
- b)123.3
- c)124.53
- d)124.52
Correct answer is option 'B'. Can you explain this answer?
Given below are the date on prices of some consumer goods and the weights attached to the various items Compute price index number for the year 1985 (Base 1984 = 100)
Q. Then weighted average of price Relative Index is :
a)
125.43
b)
123.3
c)
124.53
d)
124.52
|
|
Denali Bora answered |
Current year/base year *weight
same applied for all then /20(sum of weights)
so ans is (B)123.3 rounding of total
same applied for all then /20(sum of weights)
so ans is (B)123.3 rounding of total
If the price of all commodities in a place have increased 125 times in comparison to the base period prices, then the index number of prices for the place is now- a)100
- b)125
- c)225
- d)None of the above
Correct answer is option 'C'. Can you explain this answer?
If the price of all commodities in a place have increased 125 times in comparison to the base period prices, then the index number of prices for the place is now
a)
100
b)
125
c)
225
d)
None of the above
|
Swathilakshmi Srinivasan answered |
Base year value =100
current year value = 125
index number of price = 100 + 125=225
current year value = 125
index number of price = 100 + 125=225
The price of a commodity increases from Rs. 5 per unit in 1990 to Rs. 7.50 per unit in 1995 and the quantity consumed decreases from 120 units in 1990 to 90 units in 1995. The price and quantity in 1995 are 150% and 75% respectively of the corresponding price and quantity in 1990. Therefore, the product of the price ratio and quantity ratio is :- a)1.8
- b)1.125
- c)1.75
- d)None of these
Correct answer is option 'B'. Can you explain this answer?
The price of a commodity increases from Rs. 5 per unit in 1990 to Rs. 7.50 per unit in 1995 and the quantity consumed decreases from 120 units in 1990 to 90 units in 1995. The price and quantity in 1995 are 150% and 75% respectively of the corresponding price and quantity in 1990. Therefore, the product of the price ratio and quantity ratio is :
a)
1.8
b)
1.125
c)
1.75
d)
None of these
|
|
Freedom Institute answered |
Let us first find out the product of price and quantity in 1995 after the changes.
So,
Product of price and quantity 
Now, we will find the product of price and quantity in 1990.
So,
Product of price and quantity 
Now we have to find the required ratio, so
Ratio 
The simple Aggregative formula and weighted aggregative formula satisfy is- a)Factor Reversal Test
- b)Circular Test
- c)Unit Test
- d)None of these
Correct answer is option `A`. Can you explain this answer?
The simple Aggregative formula and weighted aggregative formula satisfy is
a)
Factor Reversal Test
b)
Circular Test
c)
Unit Test
d)
None of these
|
|
Srsps answered |
ANSWER
- a)Factor Reversal Test
The simple Aggregative formula and weighted aggregative formula satisfy is.
Factor Reversal Test.
The factor reversal test requires that multiplying a price index and a volume index of the same type should be equal to the proportionate change in the current values (e.g. the “Fisher Ideal” price and volume indexes satisfy this test, unlike either the Paasche or Laspeyres indexes).
08
If ∑ Poqo = 3500, ∑ Pnqo = 3850. Then the Cost of living Index (C.L.T.) for 1950 w.r. to base 1960 is- a)110
- b)90
- c)100
- d)None of these.
Correct answer is option 'A'. Can you explain this answer?
If ∑ Poqo = 3500, ∑ Pnqo = 3850. Then the Cost of living Index (C.L.T.) for 1950 w.r. to base 1960 is
a)
110
b)
90
c)
100
d)
None of these.
|
|
Amrutha Goyal answered |
Given information:
- Poqo = 3500
- Pnqo = 3850
To find:
- Cost of Living Index (C.L.T.) for 1950 with respect to base 1960
Solution:
Cost of Living Index (C.L.T.) is a measure of the change in the cost of a standard set of goods and services over time. It is calculated by comparing the cost of the same set of goods and services in different time periods.
We can use the following formula to calculate the Cost of Living Index (C.L.T.):
C.L.T. = (Pno / Pnb) x 100
where,
- Pno = cost of the standard set of goods and services in the current year
- Pnb = cost of the standard set of goods and services in the base year
In this case, we are given the prices of the standard set of goods and services in two different years - 1950 and 1960.
We need to find the Cost of Living Index (C.L.T.) for 1950 with respect to base 1960.
Let's assume that the standard set of goods and services cost $100 in 1960.
Using this as the base year, we can calculate the prices of the same set of goods and services in 1950 as follows:
- Poqo = 3500
- C.L.T. = (Pno / Pnb) x 100 = (3850 / 100) x 100 = 3850
Therefore, the Cost of Living Index (C.L.T.) for 1950 with respect to base 1960 is 110.
Conclusion:
The correct option is A) 110.
- Poqo = 3500
- Pnqo = 3850
To find:
- Cost of Living Index (C.L.T.) for 1950 with respect to base 1960
Solution:
Cost of Living Index (C.L.T.) is a measure of the change in the cost of a standard set of goods and services over time. It is calculated by comparing the cost of the same set of goods and services in different time periods.
We can use the following formula to calculate the Cost of Living Index (C.L.T.):
C.L.T. = (Pno / Pnb) x 100
where,
- Pno = cost of the standard set of goods and services in the current year
- Pnb = cost of the standard set of goods and services in the base year
In this case, we are given the prices of the standard set of goods and services in two different years - 1950 and 1960.
We need to find the Cost of Living Index (C.L.T.) for 1950 with respect to base 1960.
Let's assume that the standard set of goods and services cost $100 in 1960.
Using this as the base year, we can calculate the prices of the same set of goods and services in 1950 as follows:
- Poqo = 3500
- C.L.T. = (Pno / Pnb) x 100 = (3850 / 100) x 100 = 3850
Therefore, the Cost of Living Index (C.L.T.) for 1950 with respect to base 1960 is 110.
Conclusion:
The correct option is A) 110.
Fisher’s ideal formula for calculating index number satisfies the _______:- a)Unit Test
- b) Factor reversal test
- c) Both (a) & (b)
- d) None of these
Correct answer is option 'C'. Can you explain this answer?
Fisher’s ideal formula for calculating index number satisfies the _______:
a)
Unit Test
b)
Factor reversal test
c)
Both (a) & (b)
d)
None of these
|
|
Freedom Institute answered |
Answer :
- c)Both (a) & (b)
Normally, the following inequality holds;
Laspeyres >= Fisher >= Paasche. Fisher formula is called ideal formula in a sense that the time reversal test and the factor reversal test are satisfied. This formula is used in the case when prices and quantities at the base and the observation period are quite different.
Fisher's index number does not satisfy Circular test
. All methods, except simple aggregative method, assuage by unit test.
The value at the base time period serves as the standard point of comparison- a)false
- b)true
- c)both
- d)none
Correct answer is option 'B'. Can you explain this answer?
The value at the base time period serves as the standard point of comparison
a)
false
b)
true
c)
both
d)
none
|
|
Dipika Kaur answered |
The statement "The value at the base time period serves as the standard point of comparison" is true. This concept is used in financial analysis to compare the performance of a company over different time periods.
Explanation:
Heading: Base Time Period
- The base time period is a specific time period chosen by a company to serve as a reference point for comparison.
- It is usually the first year or quarter of a company's operations, or a year or quarter where there are no exceptional events that could skew the data.
- The base time period is also known as the reference period or benchmark period.
Heading: Standard Point of Comparison
- The value at the base time period is used as a standard point of comparison for subsequent time periods.
- This means that any changes in the company's financial performance are measured relative to the base time period.
- For example, if a company's revenue in the base time period was $1 million, and in the next year it increased to $1.5 million, the increase would be expressed as a percentage of the base time period revenue ($1 million), which is 50%.
Heading: Importance of Base Time Period
- The use of a base time period is important because it provides a consistent reference point for comparison over time.
- Without a base time period, it would be difficult to compare financial performance over different time periods, as there would be no standard point of comparison.
- The base time period also allows for meaningful analysis of trends and patterns in financial data, such as identifying seasonal fluctuations or long-term growth trends.
In conclusion, the statement "The value at the base time period serves as the standard point of comparison" is true. The base time period is an important concept in financial analysis, as it provides a consistent reference point for comparison over time, allowing for meaningful analysis of trends and patterns in financial data.
Explanation:
Heading: Base Time Period
- The base time period is a specific time period chosen by a company to serve as a reference point for comparison.
- It is usually the first year or quarter of a company's operations, or a year or quarter where there are no exceptional events that could skew the data.
- The base time period is also known as the reference period or benchmark period.
Heading: Standard Point of Comparison
- The value at the base time period is used as a standard point of comparison for subsequent time periods.
- This means that any changes in the company's financial performance are measured relative to the base time period.
- For example, if a company's revenue in the base time period was $1 million, and in the next year it increased to $1.5 million, the increase would be expressed as a percentage of the base time period revenue ($1 million), which is 50%.
Heading: Importance of Base Time Period
- The use of a base time period is important because it provides a consistent reference point for comparison over time.
- Without a base time period, it would be difficult to compare financial performance over different time periods, as there would be no standard point of comparison.
- The base time period also allows for meaningful analysis of trends and patterns in financial data, such as identifying seasonal fluctuations or long-term growth trends.
In conclusion, the statement "The value at the base time period serves as the standard point of comparison" is true. The base time period is an important concept in financial analysis, as it provides a consistent reference point for comparison over time, allowing for meaningful analysis of trends and patterns in financial data.
Cost of living index (C.L.I.) numbers are also to find real wages by the process of - a)Deflating of Index number.
- b)Splicing of Index number.
- c)Base shifting .
- d)None of these.
Correct answer is option 'A'. Can you explain this answer?
Cost of living index (C.L.I.) numbers are also to find real wages by the process of
a)
Deflating of Index number.
b)
Splicing of Index number.
c)
Base shifting .
d)
None of these.
|
|
Mehul Ghoshal answered |
Deflating Cost of Living Index (C.L.I.) Numbers
The cost of living index (C.L.I.) is a measure of the relative cost of living in different geographical areas, typically determined by calculating the aggregate cost of a basket of goods and services in each location. However, these raw numbers do not necessarily reflect the true purchasing power of individuals in each area, as they do not take into account differences in wages or inflation rates. To account for these factors, analysts often use a process called deflation to adjust the C.L.I. numbers.
Deflation involves dividing the C.L.I. number for a given location by the corresponding inflation rate, which yields a real cost of living index (R.C.L.I.) number. This R.C.L.I. number represents the true cost of living in that location, adjusted for the effects of inflation. By comparing R.C.L.I. numbers across different locations, analysts can determine the relative purchasing power of individuals in each area.
Using Deflated C.L.I. Numbers to Find Real Wages
Once R.C.L.I. numbers have been calculated for different locations, they can be used to determine real wages. Real wages are wages adjusted for inflation, meaning they reflect the actual purchasing power of an individual's income. To calculate real wages, analysts divide a worker's nominal wage (the wage stated in current dollars) by the R.C.L.I. number for their location. The resulting number represents the worker's real wage, or the amount of goods and services they can actually purchase with their income.
For example, suppose a worker in New York City earns a nominal wage of $20 per hour, and the R.C.L.I. for New York City is 1.05. To calculate their real wage, we would divide $20 by 1.05, yielding a real wage of $19.05 per hour. This means that the worker can purchase $19.05 worth of goods and services for every hour worked, after accounting for the effects of inflation and the relative cost of living in their location.
The cost of living index (C.L.I.) is a measure of the relative cost of living in different geographical areas, typically determined by calculating the aggregate cost of a basket of goods and services in each location. However, these raw numbers do not necessarily reflect the true purchasing power of individuals in each area, as they do not take into account differences in wages or inflation rates. To account for these factors, analysts often use a process called deflation to adjust the C.L.I. numbers.
Deflation involves dividing the C.L.I. number for a given location by the corresponding inflation rate, which yields a real cost of living index (R.C.L.I.) number. This R.C.L.I. number represents the true cost of living in that location, adjusted for the effects of inflation. By comparing R.C.L.I. numbers across different locations, analysts can determine the relative purchasing power of individuals in each area.
Using Deflated C.L.I. Numbers to Find Real Wages
Once R.C.L.I. numbers have been calculated for different locations, they can be used to determine real wages. Real wages are wages adjusted for inflation, meaning they reflect the actual purchasing power of an individual's income. To calculate real wages, analysts divide a worker's nominal wage (the wage stated in current dollars) by the R.C.L.I. number for their location. The resulting number represents the worker's real wage, or the amount of goods and services they can actually purchase with their income.
For example, suppose a worker in New York City earns a nominal wage of $20 per hour, and the R.C.L.I. for New York City is 1.05. To calculate their real wage, we would divide $20 by 1.05, yielding a real wage of $19.05 per hour. This means that the worker can purchase $19.05 worth of goods and services for every hour worked, after accounting for the effects of inflation and the relative cost of living in their location.
The index number of prices at a place in 1998 is 355 with 1991 as base. This means- a)There has been on the average a 255% increase in prices.
- b)There has been on the average a 355% increase in price.
- c)There has been on the average a 250% increase in price.
- d)None of these.
Correct answer is option 'A'. Can you explain this answer?
The index number of prices at a place in 1998 is 355 with 1991 as base. This means
a)
There has been on the average a 255% increase in prices.
b)
There has been on the average a 355% increase in price.
c)
There has been on the average a 250% increase in price.
d)
None of these.
|
|
Disha Joshi answered |
Explanation:
- An index number is a measure of the relative change in prices or quantities over time with respect to a base year. The base year index is always 100.
- The formula to calculate index number is: Index Number = (Price of current year / Price of base year) x 100
- In this case, the index number of prices in 1998 is 355 and the base year is 1991. So, we can write:
355 = (Price of 1998 / Price of 1991) x 100
- To find the increase in prices from 1991 to 1998, we can rearrange the formula as:
Price of 1998 = (355 / 100) x Price of 1991
Price of 1998 = 3.55 x Price of 1991
- This means that the price in 1998 is 3.55 times the price in 1991, or in other words, there has been a 255% increase in prices from 1991 to 1998.
Therefore, option 'A' is the correct answer.
- An index number is a measure of the relative change in prices or quantities over time with respect to a base year. The base year index is always 100.
- The formula to calculate index number is: Index Number = (Price of current year / Price of base year) x 100
- In this case, the index number of prices in 1998 is 355 and the base year is 1991. So, we can write:
355 = (Price of 1998 / Price of 1991) x 100
- To find the increase in prices from 1991 to 1998, we can rearrange the formula as:
Price of 1998 = (355 / 100) x Price of 1991
Price of 1998 = 3.55 x Price of 1991
- This means that the price in 1998 is 3.55 times the price in 1991, or in other words, there has been a 255% increase in prices from 1991 to 1998.
Therefore, option 'A' is the correct answer.
________ is particularly suitable for the construction of index nos.- a)H.M.
- b)A.M.
- c)G.M.
- d)none
Correct answer is option 'C'. Can you explain this answer?
________ is particularly suitable for the construction of index nos.
a)
H.M.
b)
A.M.
c)
G.M.
d)
none
|
|
Lakshmi Kaur answered |
Suitability of G.M. for Construction of Index Numbers
G.M. or Geometric Mean is particularly suitable for the construction of index numbers due to the following reasons:
1. Reflects Proportional Changes: The G.M. reflects proportional changes and is not affected by the magnitude of the changes. This makes it suitable for constructing index numbers as it provides a more accurate representation of the changes in a series.
2. Less Sensitive to Extreme Values: Unlike arithmetic mean, the G.M. is less sensitive to extreme values in a series. This is because the G.M. involves multiplication rather than addition, which reduces the effect of extreme values on the overall value of the series.
3. Suitable for Logarithmic Series: The G.M. is also suitable for logarithmic series, which are commonly encountered in economic and financial data. This is because the G.M. of logarithmic values can be easily calculated as the arithmetic mean of the values.
4. Consistent with Theory of Consumer Behaviour: The use of G.M. in the construction of index numbers is consistent with the theory of consumer behaviour. This is because the G.M. is used to calculate average changes in prices, which is a key factor in determining consumer behaviour.
Overall, the G.M. is a robust and reliable measure of central tendency that is particularly suitable for the construction of index numbers. Its ability to reflect proportional changes, reduce the effect of extreme values, and handle logarithmic series makes it an ideal tool for analyzing economic and financial data.
G.M. or Geometric Mean is particularly suitable for the construction of index numbers due to the following reasons:
1. Reflects Proportional Changes: The G.M. reflects proportional changes and is not affected by the magnitude of the changes. This makes it suitable for constructing index numbers as it provides a more accurate representation of the changes in a series.
2. Less Sensitive to Extreme Values: Unlike arithmetic mean, the G.M. is less sensitive to extreme values in a series. This is because the G.M. involves multiplication rather than addition, which reduces the effect of extreme values on the overall value of the series.
3. Suitable for Logarithmic Series: The G.M. is also suitable for logarithmic series, which are commonly encountered in economic and financial data. This is because the G.M. of logarithmic values can be easily calculated as the arithmetic mean of the values.
4. Consistent with Theory of Consumer Behaviour: The use of G.M. in the construction of index numbers is consistent with the theory of consumer behaviour. This is because the G.M. is used to calculate average changes in prices, which is a key factor in determining consumer behaviour.
Overall, the G.M. is a robust and reliable measure of central tendency that is particularly suitable for the construction of index numbers. Its ability to reflect proportional changes, reduce the effect of extreme values, and handle logarithmic series makes it an ideal tool for analyzing economic and financial data.
If the price index for the year, say 1960 be 110.3 and the price index for the year, say 1950 be 98.4. Then the purchasing power of money (Rupees) of 1950 will be of 1960 is- a)Rs. 1.12
- b)Rs. 1.25
- c)Rs. 1.37
- d)None of these
Correct answer is option 'A'. Can you explain this answer?
If the price index for the year, say 1960 be 110.3 and the price index for the year, say 1950 be 98.4. Then the purchasing power of money (Rupees) of 1950 will be of 1960 is
a)
Rs. 1.12
b)
Rs. 1.25
c)
Rs. 1.37
d)
None of these
|
|
Sagarika Pillai answered |
Calculation of purchasing power of money:
1. Calculate the inflation rate:
Inflation rate = (Price index for 1960 - Price index for 1950) / Price index for 1950
= (110.3 - 98.4) / 98.4
= 0.1207 or 12.07%
2. Calculate the relative value of money:
Relative value of money = 1 + inflation rate
= 1 + 0.1207
= 1.1207
3. Determine the purchasing power of money:
Purchasing power of money = Relative value of money * Value of money in 1950
= 1.1207 * 1
= 1.12
Therefore, the purchasing power of money (Rupees) of 1950 will be of 1960 is Rs. 1.12.
1. Calculate the inflation rate:
Inflation rate = (Price index for 1960 - Price index for 1950) / Price index for 1950
= (110.3 - 98.4) / 98.4
= 0.1207 or 12.07%
2. Calculate the relative value of money:
Relative value of money = 1 + inflation rate
= 1 + 0.1207
= 1.1207
3. Determine the purchasing power of money:
Purchasing power of money = Relative value of money * Value of money in 1950
= 1.1207 * 1
= 1.12
Therefore, the purchasing power of money (Rupees) of 1950 will be of 1960 is Rs. 1.12.
During a certain period the cost of living index number goes up from 110 to 200 and the salary of a worker is also raised from Rs. 330 to Rs. 500. The worker does not get really gain. Then the real wages decreased by:- a)Rs. 45.45
- b)Rs. 43.25
- c)Rs.100
- d)None of these
Correct answer is option 'C'. Can you explain this answer?
During a certain period the cost of living index number goes up from 110 to 200 and the salary of a worker is also raised from Rs. 330 to Rs. 500. The worker does not get really gain. Then the real wages decreased by:
a)
Rs. 45.45
b)
Rs. 43.25
c)
Rs.100
d)
None of these
|
|
Anu Kaur answered |
Calculation of Cost of Living Index
To calculate the change in real wages, we need to first calculate the change in the cost of living index. The given data shows that the cost of living index has increased from 110 to 200.
Change in Cost of Living Index = (New Index - Old Index) / Old Index * 100
= (200 - 110) / 110 * 100
= 81.82%
Calculation of Nominal Wages
Next, we need to calculate the nominal wages of the worker before and after the increase.
Nominal Wages Before = Rs. 330
Nominal Wages After = Rs. 500
Calculation of Real Wages
Real wages are the wages adjusted for inflation. To calculate the real wages, we need to adjust the nominal wages for the change in the cost of living index.
Real Wages Before = (Nominal Wages Before / Cost of Living Index Before) * 100
= (330 / 110) * 100
= Rs. 300
Real Wages After = (Nominal Wages After / Cost of Living Index After) * 100
= (500 / 200) * 100
= Rs. 250
Calculation of Change in Real Wages
The change in real wages is calculated as the difference between the real wages before and after the increase.
Change in Real Wages = Real Wages After - Real Wages Before
= Rs. 250 - Rs. 300
= - Rs. 50
The negative value indicates a decrease in real wages.
Conclusion
The calculation shows that the worker's real wages have decreased by Rs. 50. Since the increase in nominal wages is not enough to keep up with the increase in the cost of living index, the worker experiences a decrease in purchasing power.
To calculate the change in real wages, we need to first calculate the change in the cost of living index. The given data shows that the cost of living index has increased from 110 to 200.
Change in Cost of Living Index = (New Index - Old Index) / Old Index * 100
= (200 - 110) / 110 * 100
= 81.82%
Calculation of Nominal Wages
Next, we need to calculate the nominal wages of the worker before and after the increase.
Nominal Wages Before = Rs. 330
Nominal Wages After = Rs. 500
Calculation of Real Wages
Real wages are the wages adjusted for inflation. To calculate the real wages, we need to adjust the nominal wages for the change in the cost of living index.
Real Wages Before = (Nominal Wages Before / Cost of Living Index Before) * 100
= (330 / 110) * 100
= Rs. 300
Real Wages After = (Nominal Wages After / Cost of Living Index After) * 100
= (500 / 200) * 100
= Rs. 250
Calculation of Change in Real Wages
The change in real wages is calculated as the difference between the real wages before and after the increase.
Change in Real Wages = Real Wages After - Real Wages Before
= Rs. 250 - Rs. 300
= - Rs. 50
The negative value indicates a decrease in real wages.
Conclusion
The calculation shows that the worker's real wages have decreased by Rs. 50. Since the increase in nominal wages is not enough to keep up with the increase in the cost of living index, the worker experiences a decrease in purchasing power.
When the product of price index and the quantity index is equal to the corresponding value index then the test that holds is- a)Unit Test
- b)Time Reversal Test
- c)Factor Reversal Test
- d)None holds
Correct answer is option 'C'. Can you explain this answer?
When the product of price index and the quantity index is equal to the corresponding value index then the test that holds is
a)
Unit Test
b)
Time Reversal Test
c)
Factor Reversal Test
d)
None holds
|
Ishani Rane answered |
Factor Reversal Test: It says that the product of a price index and the quantity index should be equal to value index. In the words of Fisher, just as each formula should permit the interchange of the two times without giving inconsistent results similarly it should permit interchanging the prices and quantities without giving inconsistent results which means two results multiplied together should give the true value ratio.
During a certain period the cost of living index number goes up from 110 to 200 and the salary of a worker is also raised from Rs. 325 to Rs. 500. The worker does not get really gain. Then the real wages decreased by :- a)Rs. 90.90
- b)Rs. 43.25
- c)Rs. 44.28
- d)Rs 45.45
Correct answer is option 'A'. Can you explain this answer?
During a certain period the cost of living index number goes up from 110 to 200 and the salary of a worker is also raised from Rs. 325 to Rs. 500. The worker does not get really gain. Then the real wages decreased by :
a)
Rs. 90.90
b)
Rs. 43.25
c)
Rs. 44.28
d)
Rs 45.45
|
|
Saumya Khanna answered |
Firstly, we will calculate by how much the living index number increase, i.e.
200/110 = 1.818
Now, we'll multiply this factor by the wages before increase, so as to calculate the final increased wages for maintaining the right balance.
Rs 325 * 1.818 = Rs. 590.90
Hence, the real wages decrease by Rs.590.90 - Rs.500 = Rs.90.90
Chapter doubts & questions for Chapter 18: Index numbers - Quantitative Aptitude for CA Foundation 2025 is part of CA Foundation exam preparation. The chapters have been prepared according to the CA Foundation exam syllabus. The Chapter doubts & questions, notes, tests & MCQs are made for CA Foundation 2025 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests here.
Chapter doubts & questions of Chapter 18: Index numbers - Quantitative Aptitude for CA Foundation in English & Hindi are available as part of CA Foundation exam.
Download more important topics, notes, lectures and mock test series for CA Foundation Exam by signing up for free.
Quantitative Aptitude for CA Foundation
101 videos|209 docs|89 tests
|
|
© EduRev
|
Education Revolution
|
|
Signup on EduRev and stay on top of your study goals
10M+ students crushing their study goals daily