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State with reason whether you agree or disagree with the following statement: Index numbers can be constructed without the base year. - Economics

MCQ
True or False

State with reason whether you agree or disagree with the following statement:

Index numbers can be constructed without the base year.

Options

  • Agree

  • Disagree

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Solution

I disagree with the above statement.

Reason:

  1. An index number is a device to measure changes in an economic variable over a period of time.
  2. The year with which the changes are measured is termed as the base year.
  3. In other words, the year with respect to which comparisons are made is the base year.
  4. The base year is denoted by the suffix ‘o’.
  5. If there is no base year, there will be no base against which current year variables can be measured.
  6. Hence, it is not possible to construct index numbers without the base year.
Concept: Limitations of Index Numbers
  Is there an error in this question or solution?
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APPEARS IN

Balbharati Economics 12th Standard HSC Maharashtra State Board
Chapter 6 Index Numbers
Exercise | Q 5. (3) | Page 60
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