Index Numbers- Unweighted

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  • Q1

    Define base year.

    Marks:1
    Answer:

    Base year is the year with reference to which prices of the current year are compared to construct index number.

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  • Q2

    In 2010, the price of commodity X was INR 20 and in 2015, it was INR35, the relative change is

    Marks:1
    Answer:

    Relative change in prices is the difference of prices in relation to the base year price., i.e., (35-20) divided by 20 or 15 divided by 20 which is equal to 0.75.

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  • Q3

    Define index number.

    Marks:1
    Answer:

    An index number is a statistical tool for measuring changes in the magnitude of a group of related variables. It is a measure of the average change in a group of related variables over two different situations.

    or

    An index number is a specialised average designed to measure the net change in a group of related variables over a period of time.

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  • Q4

    What is meant by relative change?

    Marks:1
    Answer:

    Relative change in prices is the difference of prices in relation to the base year price.

    Relative change is equal to actual differences of prices divided by base year price.

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  • Q5

    What do you mean by actual difference?

    Marks:1
    Answer:

    Actual difference in price is the difference between the current year and the base year price.

    Actual difference = Current year price - Base year price

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