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Statements that are incorrect in relation to index numbers:
- An index number is a geographical tool.
- Index numbers measure changes in air pressure.
- Index numbers measure relative changes in an economic variable.
- Index numbers are specialized averages.
Concept: Index Numbers
Statements related to limitations of index numbers.
- Index numbers are not completely reliable.
- There may be a bias in the data collected.
- Every formula has some kind of defect.
- Index numbers ignore changes in the qualities of products.
Concept: Limitations of Index Numbers
Statements that highlight the significance of index numbers.
- Index numbers are useful for making future predictions.
- Index numbers help in the measurement of inflation.
- Index numbers help to frame suitable policies.
- Index numbers can be misused.
Concept: Significance of Index Numbers
Laaspeyre's index : _________ :: Paasche's index : Current year quantities
Concept: Construction of Index Numbers
Calculate the price index number from the given data:
| Commodity | A | B | C | D |
| Price in 2005 (₹) | 6 | 16 | 24 | 4 |
| Price in 2010 (₹) | 8 | 18 | 28 | 6 |
Concept: Construction of Index Numbers
State with reason whether you agree or disagree with the following statement:
Index numbers measure changes in the price level only.
Concept: Index Numbers
State with reasons whether you agree or disagree with the following statement:
Index numbers can be constructed without the base year.
Concept: Index Numbers
Statements related to weighted index number:
- Suitable weights are assigned to various commodities.
- It gives relative importance to the commodity in the group.
- In most cases, quantities are used as weights.
- Laaspeyre’s Price index and Paasche’s Price Index are methods of constructing weighted index number.
Concept: Construction of Index Numbers
Find the odd word
Types of index numbers -
Concept: Index Numbers
Assertion (A): Generally, arithmetic mean is used in the construction of index numbers.
Reasoning (R): Arithmetic mean is simple to compute compared to other averages.
Concept: Construction of Index Numbers
Identify & explain the concept from the given illustration.
Bombay Stock Exchange has developed “Sensex” as a stock market index for reflecting the share prices of listed companies.
Concept: Index Numbers
Construct Quantity index number from the given data:
| Commodity | A | B | C | D | E |
| Base year quantities | 170 | 150 | 100 | 195 | 205 |
| Current year quantities | 90 | 70 | 75 | 150 | 95 |
Concept: Index Numbers
State with reason whether you agree or disagree with the following statement:
Any year can be selected as the base year
Concept: Construction of Index Numbers
Study the following table, figure, passage and answer the question given below it.
| Commodities | Price in 2015 in Rs (base year) P0 |
Price in 2019 in Rs. (current year) P1 |
| L | 20 | 30 |
| M | 60 | 80 |
| N | 100 | 130 |
| O | 40 | 60 |
| Total | ∑P0 = ? | ∑P1 = ? |
- Complete the above table (1m)
- Construct Price Index number from the above data (3m)
Concept: Construction of Index Numbers
Assertion and reasoning question:
- Assertion (A): The index number considers all factors.
- Reasoning (R): The index number is based on samples.
Concept: Index Numbers
State with reasons whether you agree or disagree with the following statement:
Index number measures changes in the price level only.
Concept: Index Numbers
Choose the correct pair:
| Group A | Group B |
| A. Price Index | (a) `(sump_1q_1)/(sump_0q_0) xx 100` |
| B. Value Index | (b) `(sumq_1)/(sumq_0) xx 100` |
| C. Quantity Index | (c) `(sump_1q_1)/(sump_0q_1) xx 100` |
| D. Paasche's Index | (d) `(sump_1)/(sump_0) xx 100` |
Concept: Types of Index Numbers
Index numbers are very significant/important in economics.
Concept: Significance of Index Numbers
Read the given passage and answer the questions:
|
Index Number is a technique of measuring changes in a variable or group of related variables with reference to time, geographical location and other characteristics. Index Number is very useful for economists, farmers, traders, government, educationalists and trade union leaders for planning and implementing the plans according to their sector. The scope of index number is not limited to only one subject but it extends to many subjects such as Economics, Educational science, Psychology, History, Sociology, Geography etc. While framing index number its objective must be determined. To attain the objective the information is collected in various ways and this information is used for comparing two different time periods. For this purpose, the base year’s index is assumed as 100 and accordingly the value of the current year is calculated. Laspeyre, Paasche and Fisher have suggested different methods for constructing index numbers. |
- Explain the meaning of Index Number.
- To whom the Index Number is useful?
- Express your opinion about the given passage.
Concept: Index Numbers
