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Time reversal Test is satisfied by following index number formula is
- a)Laspeyre’s Index number.
- b)Simple Arithmetic Mean of price relative formula
- c)Marshall-Edge worth formula.
- d)None of these.
Correct answer is option 'C'. Can you explain this answer?
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Most Upvoted Answer
Time reversal Test is satisfied by following index number formula isa)...
Explanation:
Time reversal Test is one of the important tests that are used to check the consistency of index number formulae. This test is used to determine whether an index number formula will give the same result when the data is reversed in time. The formula that satisfies the Time reversal Test is considered to be a consistent and reliable formula.
The different types of index number formula are:
A. Laspeyres Index number:
Laspeyres index number is a formula that measures the changes in the price of a fixed basket of goods over time. It is computed by using the prices of the base period as weights. However, this formula does not satisfy the Time reversal test.
B. Simple Arithmetic Mean of price relative formula:
The Simple Arithmetic Mean of price relative formula is a simple and easy formula to calculate index number. It is calculated by averaging the price relatives of all the items in the basket. This formula also does not satisfy the Time reversal test.
C. Marshall-Edge worth formula:
The Marshall-Edge worth formula is a formula that is used to calculate the index number. This formula is based on the concept of the expenditure of a consumer on a fixed basket of goods. This formula satisfies the Time reversal test and is considered to be a reliable formula.
D. None of these:
Option D is incorrect as the Marshall-Edge worth formula satisfies the Time reversal test.
Conclusion:
The Marshall-Edge worth formula satisfies the Time reversal test, which makes it a reliable formula for calculating index numbers. This formula is widely used by economists and statisticians to measure the changes in the prices of goods and services.
Time reversal Test is one of the important tests that are used to check the consistency of index number formulae. This test is used to determine whether an index number formula will give the same result when the data is reversed in time. The formula that satisfies the Time reversal Test is considered to be a consistent and reliable formula.
The different types of index number formula are:
A. Laspeyres Index number:
Laspeyres index number is a formula that measures the changes in the price of a fixed basket of goods over time. It is computed by using the prices of the base period as weights. However, this formula does not satisfy the Time reversal test.
B. Simple Arithmetic Mean of price relative formula:
The Simple Arithmetic Mean of price relative formula is a simple and easy formula to calculate index number. It is calculated by averaging the price relatives of all the items in the basket. This formula also does not satisfy the Time reversal test.
C. Marshall-Edge worth formula:
The Marshall-Edge worth formula is a formula that is used to calculate the index number. This formula is based on the concept of the expenditure of a consumer on a fixed basket of goods. This formula satisfies the Time reversal test and is considered to be a reliable formula.
D. None of these:
Option D is incorrect as the Marshall-Edge worth formula satisfies the Time reversal test.
Conclusion:
The Marshall-Edge worth formula satisfies the Time reversal test, which makes it a reliable formula for calculating index numbers. This formula is widely used by economists and statisticians to measure the changes in the prices of goods and services.
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Time reversal Test is satisfied by following index number formula isa)Laspeyres Index number.b)Simple Arithmetic Mean of price relative formulac)Marshall-Edge worth formula.d)None of these.Correct answer is option 'C'. Can you explain this answer?
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Time reversal Test is satisfied by following index number formula isa)Laspeyres Index number.b)Simple Arithmetic Mean of price relative formulac)Marshall-Edge worth formula.d)None of these.Correct answer is option 'C'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Time reversal Test is satisfied by following index number formula isa)Laspeyres Index number.b)Simple Arithmetic Mean of price relative formulac)Marshall-Edge worth formula.d)None of these.Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Time reversal Test is satisfied by following index number formula isa)Laspeyres Index number.b)Simple Arithmetic Mean of price relative formulac)Marshall-Edge worth formula.d)None of these.Correct answer is option 'C'. Can you explain this answer?.
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