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Question
Define family budget method
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Solution
In this method, the weights are calculated by multiplying prices and quantity of the base year.
i.e. V = `sum"p"_0"q"_0`.
The formula is given by,
Cost of Living Index Number = `(sum"pv")/(sum"v")`
Where P = `"p"_1/"p"_0 xx 100` is the price relative.
V = `sum"p"_0"q"_0` is the value relative.
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RELATED QUESTIONS
Features of index numbers:
- It is useful in framing suitable economic policies.
- It is useful to present financial data in real terms
- Index numbers are statistical devices.
- Index numbers are specialized averages.
Index number was originally developed to measure ______.
Index number which is computed from a single variable called is a ______.
State the uses of Index Number
Choose the correct alternative:
Laspeyre’s index = 110, Paasche’s index = 108, then Fisher’s Ideal index is equal to:
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 |
Compute the consumer price index for 2015 on the basis of 2014 from the following data.
| Commodities | Quantities | Prices in 2015 | Prices in 2016 |
| A | 6 | 5.75 | 6.00 |
| B | 6 | 5.00 | 8.00 |
| C | 1 | 6.00 | 9.00 |
| D | 6 | 8.00 | 10.00 |
| E | 4 | 2.00 | 1.50 |
| F | 1 | 20.00 | 15.00 |
An Enquiry was made into the budgets of the middle class families in a city gave the following information.
| Expenditure | Food | Rent | Clothing | Fuel | Rice |
| Price(2010) | 150 | 50 | 100 | 20 | 60 |
| Price(2011) | 174 | 60 | 125 | 25 | 90 |
| Weights | 35 | 15 | 20 | 10 | 20 |
What changes in the cost of living have taken place in the middle class families of a city?
Choose the correct pair.
| Group A | Group B |
| 1) Price Index | a) `(sump_1q_1)/(sump_0q_0)xx100` |
| 2) Value Index | b) `(sumq_1)/(sumq_0)xx100` |
| 3) Quantity Index | c) `(sump_1q_1)/(sump_0q_1)xx100` |
| 4) Paasche's Index | d) `(sump_1)/(sump_0)xx100` |
Find the odd word out:
Features of Index Number:
