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# Unit 1: Index Numbers (Part-2) CA Foundation Notes | EduRev

## Business Mathematics and Logical Reasoning & Statistics

Created by: Sushil Kumar

## CA Foundation : Unit 1: Index Numbers (Part-2) CA Foundation Notes | EduRev

The document Unit 1: Index Numbers (Part-2) CA Foundation Notes | EduRev is a part of the CA Foundation Course Business Mathematics and Logical Reasoning & Statistics.
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Summary

• An index number is a ratio or an average of ratios expressed as a percentage, Two or more time periods are involved, one of which is the base time period.
• Issues Involved in index numbers
(a ) Selection of Data
(b) Base period
(c) Selection of Weights:
(d) Use of Averages:
(e) Choice of Variables

Construction of Index Number
Price Index numbers
(a) Simple aggregative price index = (b) Laspeyres’ Index: In this Index base year quantities are used as weights:
Laspeyres Index = (c) Paasche’s Index: In this Index current year quantities are used as weights:
Passche’s Index (d) The Marshall-Edgeworth index uses this method by taking the average of the base year and the current year
Marshall-Edgeworth Index  = • Fisher’s ideal Price Index: This index is the geometric mean of Laspeyres’ and Paasche’s.
Fisher’s Index = • Weighted Average of Relative Method: • (h) Chain Index = Quantity Index Numbers:

• Simple aggregate of quantities: • The simple average of quantity relatives: • Weighted aggregate quantity indices:
(i) With base year weight : (ii) With current year weight : (iii) Geometric mean of (i) and (ii) : • Base-year weighted average of quantity relatives. This has the formula • Value Indices • Deflated Value = or • Shifted Price Index = (1) Unit test (2) Time reversal Test (3) Factor reversal test (4) Circular Test
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