Major Characteristics of Index Numbers

Index numbers are statistical tools used to measure the relative change in a variable or a group of variables over a specific period of time. They provide valuable information about the direction and magnitude of changes in various economic and social phenomena. The major characteristics of index numbers are as follows:

1. Expressed in Percentages:
- Index numbers are typically expressed in percentages. They represent the percentage change in a variable or a group of variables relative to a base period. For example, if the index number for a particular variable is 120, it means that the variable has increased by 20% compared to the base period.

2. Measure Net or Relative Changes:
- Index numbers measure the net or relative changes in variables. They indicate the overall change in a variable without considering the individual components or factors that contribute to the change. For example, a consumer price index measures the average change in prices of a basket of goods and services consumed by households, without considering the specific price changes of individual items.

3. Measure Changes over a Period of Time:
- Index numbers are used to measure changes over a specific period of time. They provide information about the trend or pattern of change in a variable over time. For instance, a stock market index measures the performance of a group of stocks over a particular period, reflecting the overall movement of the stock market.

4. Useful for Comparisons:
- Index numbers are useful for making comparisons between different periods, regions, or groups. They allow for the comparison of variables that may have different units of measurement or magnitudes. For example, a literacy index can be used to compare the literacy rates of different countries, even if their absolute literacy rates are different.

5. Base Period:
- Index numbers are calculated with reference to a base period. The base period is usually chosen as a representative period or a period of stability. It serves as a benchmark for comparing the changes in variables over time. The index number for the base period is typically set to 100, and subsequent periods are expressed relative to this base.

In conclusion, index numbers are expressed in percentages, measure the net or relative changes in variables, and provide information about changes over a period of time. These characteristics make index numbers a valuable tool in analyzing economic and social trends, making comparisons, and monitoring changes in various phenomena.

Index numbers have the following major characteristics:

They are expressed in percentages, representing relative changes.
They measure the net or relative changes in variables, such as prices or quantities.
They are used to measure changes over a period of time.
Therefore, all of the above statements (Option D) are correct.