Index numbers are free from a unit of measurement because the index number shows
Index numbers are unitfree measures of economic indicators. Index numbers are based on a value of 100, which makes it easy to measure percent changes.
Factor Reversal Test is expressed in terms of
Circular Test satisfy is
From the following data for the 5 groups combined
The general Index number is
Correct Answer : b
Explanation :
Group weight index number = Weighted Index/ Total Weight
= 26920/100
= 269.2
Group weight index number = 269.2
From the following data with 1966 as base year
Q. The price per unit of commodity A in 1966 is
The index number in whole sale prices is 152 for August 1999 compared to August 1998.During the year there is net increase in prices of whole sale commodities to the extent of
Fishers price index number is the 
Laspeyres and Paasche Price Indexes or Inflation Factors will differ. Their geometric averages are called Fisher Indexes (after Irving Fisher). As a measure of the inflation factor (one plus the inflation rate), a Fisher Price Index is the square root of the product of Laspeyres and Paasche Price Indexes.
Purchasing Power of Money is
The price level of a country in a certain year has increased 25% over the base period.The index number is
The index number of prices at a place in 1998 is 355 with 1991 as base. This means
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
The whole sale price index number or agricultural commodities in a given region at a given date is 280. The percentage use in prices of agricultural commodities over the base year is :
If now the prices of all the commodities in a place have been decreased by 85% over the base period prices, then the index number of prices for the place is now (index number of prices of base period = 100)
From the data given below
Q. Then the suitable index number is
Bowley’s Index number is expressed in terms of :
From the following data
Q. The simple Aggregative Index is
Correct Answer : B
Explanation : Sum of current price = 235
Sum of base price = 212
=> 235/212*100
= 110.8
With regard to Laspeyre’s and Paasche’s price index number, it is maintained that “If the prices of all the goods change in the same ratio, the two indices will be equal for them the weighting system is irrelevant; or if the quantities of all the goods change in the same ratio, they will be equal, for them the two weighting systems are the same relatively”.Then the above statements satisfy.
The quantity Index number using Fisher’s formula satisfies :
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’.
For constructing consumer price Index is used :
The cost of living Index (C.L.I.) is always :
The Time Reversal Test is not satisfied to :
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 :
The Factor Reversal Test is as represented symbolically is :
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 :
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
Circular Test is not met by :
Circular test is satisfied by:
The value index is equal to :The value index is equal to :
Time Reversal Test is represented symbolically by :
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 :
From the following data
Q. The price index number for the year 1934 is :
ANSWER : d
Solution : Price Index = ΣP(Current area)/ΣP(Base Area) * 100
= (42/31)*100
= 135.48
From the following data
Q. The index number by unweighted methods :
The Bowley’s Price index number is represented in terms of :
Fisher’s price index number equal is :
The price index number using simple G.M. of the relatives is given by :
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 :
From the following data
Q. The general Index I is given by :
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 :
Test whether the index number due to Walsh give by :
In Laspeyre’s Price Index, the quantities uses weight related to
It is defined as a fixedweight, or fixedbasket, index that uses the basket of goods and services and their weights from the base period. It is also known as a “baseweighted index”. In price statistics other price index formulas may be used (Paasche price index, Fisher price index).
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 :
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