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Laspeyre’s or Paasche’s or the Fisher’s ideal index do not satisfy
- a)Time Reversal Test
- b)Unit Test
- c)Circular Test
- d)none
Correct answer is option 'C'. Can you explain this answer?
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Most Upvoted Answer
Laspeyre’s or Paasche’s or the Fisher’s ideal index ...
Test of Index Numbers:
Index Numbers are used to measure the changes in the level of economic activity over time. It is important to ensure that the index numbers are reliable and accurate. To achieve this, various tests of index numbers are conducted. They are:
1. Time Reversal Test:
In this test, the index numbers are calculated by reversing the time period. If the results obtained are different from the original index numbers, then the index numbers are said to fail the time reversal test.
2. Unit Test:
In this test, the index numbers are calculated using the same units of measurement. If the results obtained using different units of measurement are different, then the index numbers are said to fail the unit test.
3. Circular Test:
In this test, the index numbers are calculated using two different methods. If the results obtained using both methods are different, then the index numbers are said to fail the circular test.
Laspeyres, Paasches or the Fishers ideal index and the Tests:
Laspeyres, Paasches or the Fishers ideal index are commonly used methods to calculate index numbers. However, these methods do not satisfy the circular test. This means that the results obtained using these methods may not be accurate and reliable.
Hence, the correct answer is option 'C' - Circular Test.
Index Numbers are used to measure the changes in the level of economic activity over time. It is important to ensure that the index numbers are reliable and accurate. To achieve this, various tests of index numbers are conducted. They are:
1. Time Reversal Test:
In this test, the index numbers are calculated by reversing the time period. If the results obtained are different from the original index numbers, then the index numbers are said to fail the time reversal test.
2. Unit Test:
In this test, the index numbers are calculated using the same units of measurement. If the results obtained using different units of measurement are different, then the index numbers are said to fail the unit test.
3. Circular Test:
In this test, the index numbers are calculated using two different methods. If the results obtained using both methods are different, then the index numbers are said to fail the circular test.
Laspeyres, Paasches or the Fishers ideal index and the Tests:
Laspeyres, Paasches or the Fishers ideal index are commonly used methods to calculate index numbers. However, these methods do not satisfy the circular test. This means that the results obtained using these methods may not be accurate and reliable.
Hence, the correct answer is option 'C' - Circular Test.
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Community Answer
Laspeyre’s or Paasche’s or the Fisher’s ideal index ...
C
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Laspeyre’s or Paasche’s or the Fisher’s ideal index do not satisfya)Time Reversal Testb)Unit Testc)Circular Testd)noneCorrect answer is option 'C'. Can you explain this answer?
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