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Question
State the uses of Index Number
Solution
The uses of Index number are as given below:
(1) Index number is an important tool for formulating decision and management p policies.
(2) It helps in studying the trends and tendencies.
(3) It determines the inflation and deflation in an Economy.
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RELATED QUESTIONS
______ : Base year prices :: P1 : Current year prices
Device that measures changes in an economic variable or a group of variables over a period of time –
Define Laspeyre’s price index number
Define Time Reversal Test
Compute (i) Laspeyre’s (ii) Paasche’s (iii) Fisher’s Index numbers for the 2010 from the following data.
| Commodity | Price | Quantity | ||
| 2000 | 2010 | 2000 | 2010 | |
| A | 12 | 14 | 18 | 16 |
| B | 15 | 16 | 20 | 15 |
| C | 14 | 15 | 24 | 20 |
| D | 12 | 12 | 29 | 23 |
Calculate the cost of living index by aggregate expenditure method:
| Commodity | Weight 2010 |
Price (Rs.) | |
| 2010 | 2015 | ||
| P | 80 | 22 | 25 |
| Q | 30 | 30 | 45 |
| R | 25 | 42 | 50 |
| S | 40 | 25 | 35 |
| T | 50 | 36 | 52 |
Choose the correct alternative:
Another name of consumer’s price index number is:
Choose the correct alternative:
Which of the following Index number satisfy the time reversal test?
Calculate the Laspeyre’s, Paasche’s and Fisher’s price index number for the following data. Interpret on the data.
| Commodities | Base Year | Current Year | ||
| Price | Quantity | Price | Quantity | |
| A | 170 | 562 | 72 | 632 |
| B | 192 | 535 | 70 | 756 |
| C | 195 | 639 | 95 | 926 |
| D | 1987 | 128 | 92 | 255 |
| E | 1985 | 542 | 92 | 632 |
| F | 150 | 217 | 180 | 314 |
| 7 | 12.6 | 12.7 | 12.5 | 12.8 |
| 8 | 12.4 | 12.3 | 12.6 | 12.5 |
| 9 | 12.6 | 12.5 | 12.3 | 12.6 |
| 10 | 12.1 | 12.7 | 12.5 | 12.8 |
Explain the meaning of index number.
