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Each of the following statements is either True or False with your choice of the answer by writing F for False.
- a)Simple Aggregative and simple Geometric mean of price relatives formula satisfy circular Test.
- b)Base year prices are taken as weights in Laspeyre’s quantity index numbers.
- c)Fisher’s Ideal Index formula obeys time reversal and factor reversal tests.
- d)None of these.
Correct answer is option 'D'. Can you explain this answer?
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Each of the following statements is either True or False with your cho...
Explanation:
Circular test, time reversal test, and factor reversal test are three important tests that should be satisfied by any index number formula to prove its correctness and reliability. Let us discuss each statement one by one:
a) Simple Aggregative and simple Geometric mean of price relatives formula satisfy circular Test.
- This statement is False. Both Simple Aggregative and simple Geometric mean of price relatives formula do not satisfy the circular test. This is because both these formulas use the base year prices as weights, which results in a circular reference problem.
b) Base year prices are taken as weights in Laspeyres quantity index numbers.
- This statement is True. Laspeyres quantity index numbers use the base year prices as weights to calculate the index numbers. This formula is widely used in the construction of price indices.
c) Fishers Ideal Index formula obeys time reversal and factor reversal tests.
- This statement is also False. Fisher's Ideal Index formula is known to satisfy the time reversal test, but it does not satisfy the factor reversal test. This is because the Fisher's Ideal Index formula uses the geometric mean of the price relatives as weights, which makes it difficult to satisfy the factor reversal test.
d) None of these.
- This statement is the correct answer. The correct answer is None of these because the first and the third statements are False, and the second statement is True.
Circular test, time reversal test, and factor reversal test are three important tests that should be satisfied by any index number formula to prove its correctness and reliability. Let us discuss each statement one by one:
a) Simple Aggregative and simple Geometric mean of price relatives formula satisfy circular Test.
- This statement is False. Both Simple Aggregative and simple Geometric mean of price relatives formula do not satisfy the circular test. This is because both these formulas use the base year prices as weights, which results in a circular reference problem.
b) Base year prices are taken as weights in Laspeyres quantity index numbers.
- This statement is True. Laspeyres quantity index numbers use the base year prices as weights to calculate the index numbers. This formula is widely used in the construction of price indices.
c) Fishers Ideal Index formula obeys time reversal and factor reversal tests.
- This statement is also False. Fisher's Ideal Index formula is known to satisfy the time reversal test, but it does not satisfy the factor reversal test. This is because the Fisher's Ideal Index formula uses the geometric mean of the price relatives as weights, which makes it difficult to satisfy the factor reversal test.
d) None of these.
- This statement is the correct answer. The correct answer is None of these because the first and the third statements are False, and the second statement is True.
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Each of the following statements is either True or False with your choice of the answer by writing F for False.a)Simple Aggregative and simple Geometric mean of price relatives formula satisfy circular Test.b)Base year prices are taken as weights in Laspeyres quantity index numbers.c)Fishers Ideal Index formula obeys time reversal and factor reversal tests.d)None of these.Correct answer is option 'D'. Can you explain this answer?
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Each of the following statements is either True or False with your choice of the answer by writing F for False.a)Simple Aggregative and simple Geometric mean of price relatives formula satisfy circular Test.b)Base year prices are taken as weights in Laspeyres quantity index numbers.c)Fishers Ideal Index formula obeys time reversal and factor reversal tests.d)None of these.Correct answer is option 'D'. 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 Each of the following statements is either True or False with your choice of the answer by writing F for False.a)Simple Aggregative and simple Geometric mean of price relatives formula satisfy circular Test.b)Base year prices are taken as weights in Laspeyres quantity index numbers.c)Fishers Ideal Index formula obeys time reversal and factor reversal tests.d)None of these.Correct answer is option 'D'. 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 Each of the following statements is either True or False with your choice of the answer by writing F for False.a)Simple Aggregative and simple Geometric mean of price relatives formula satisfy circular Test.b)Base year prices are taken as weights in Laspeyres quantity index numbers.c)Fishers Ideal Index formula obeys time reversal and factor reversal tests.d)None of these.Correct answer is option 'D'. Can you explain this answer?.
Each of the following statements is either True or False with your choice of the answer by writing F for False.a)Simple Aggregative and simple Geometric mean of price relatives formula satisfy circular Test.b)Base year prices are taken as weights in Laspeyres quantity index numbers.c)Fishers Ideal Index formula obeys time reversal and factor reversal tests.d)None of these.Correct answer is option 'D'. 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 Each of the following statements is either True or False with your choice of the answer by writing F for False.a)Simple Aggregative and simple Geometric mean of price relatives formula satisfy circular Test.b)Base year prices are taken as weights in Laspeyres quantity index numbers.c)Fishers Ideal Index formula obeys time reversal and factor reversal tests.d)None of these.Correct answer is option 'D'. 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 Each of the following statements is either True or False with your choice of the answer by writing F for False.a)Simple Aggregative and simple Geometric mean of price relatives formula satisfy circular Test.b)Base year prices are taken as weights in Laspeyres quantity index numbers.c)Fishers Ideal Index formula obeys time reversal and factor reversal tests.d)None of these.Correct answer is option 'D'. Can you explain this answer?.
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