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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.
All you need of CA Foundation at this link: CA Foundation

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) Laspeyresâ€™ Index: In this Index base year quantities are used as weights:
Laspeyres Index =
(c) Paascheâ€™s Index: In this Index current year quantities are used as weights:
Passcheâ€™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  =

• Fisherâ€™s ideal Price Index: This index is the geometric mean of Laspeyresâ€™ and Paascheâ€™s.
Fisherâ€™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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