Tag: introduction to index numbers

Questions Related to introduction to index numbers

Index for base period is always taken as: 

business mathematics and statistics introduction to index number introduction to index numbers index numbers applied statistics

  1. $100$

  2. $1$

  3. $200$

  4. $0$

Show answer
Correct Option: A
Explanation:

$\Rightarrow$  Index for base period is always taken as : $100$.

$\Rightarrow$  A base year is the first of a series of years in an economic or financial index. It is typically set to an arbitrary level of 100. 
$\Rightarrow$  New, up-to-date base years are periodically introduced to keep data current in a particular index. 
$\Rightarrow$  Any year can serve as a base year, but analysts typically choose recent years.

An index number that can serve many purposes is called:

business mathematics and statistics introduction to index number introduction to index numbers index numbers applied statistics

  1. General purpose index

  2. Special purpose index

  3. Cost of living index

  4. None of them

Show answer
Correct Option: A
Explanation:

An index number that can serve many purposes is called general purpose index.

_____ indicates the changes in monetary value

business mathematics and statistics introduction to index number introduction to index numbers index numbers applied statistics

  1. Price Index

  2. Cost Index

  3. GDP Reflector

  4. All the above

Show answer
Correct Option: A
Explanation:

Price Index indicates the changes in monetary value.

Price relatives are a percentage ratio of current year price and:

business mathematics and statistics introduction to index number introduction to index numbers index numbers applied statistics

  1. Base year quantity

  2. Previous year quantity

  3. Base year price

  4. Current year quantity

Show answer
Correct Option: C
Explanation:

$\Rightarrow$  Price relatives are a percentage ratio of current year price and $Base\, year\, price$.

$\Rightarrow$  Thus, $Price\, relative=\dfrac{P _1}{P _0}\times 100,$ where $P _0$ is the price in the base year and $P _1$ of corresponding commodity in present year (for which index is to be calculated)

Index numbers are expressed in:

business mathematics and statistics introduction to index number introduction to index numbers index numbers applied statistics

  1. Ratios

  2. Squares

  3. Percentages

  4. Combinations

Show answer
Correct Option: C
Explanation:

$\Rightarrow$  Index numbers are expressed in : $Percentage$.

$\Rightarrow$  Index numbers are expressed in terms of percentages to show the extent of relative change.
$\Rightarrow$  Index numbers measure relative changes. They measure the relative change in the value of a variable or a group of related variables over a period of time or between places.
$\Rightarrow$  Index numbers measures changes which are not directly measurable.

Why do we need an index number?

business mathematics and statistics introduction to index number introduction to index numbers index numbers applied statistics

  1. helpful in measuring changes in value of money

  2. helful for business community

  3. in measuring labour quality

  4. All the above

Show answer
Correct Option: A,B
Explanation:

We need an index number because it is helpful in measuring changes in value of money and it is also helpful for business community.

Index numbers can be used for:

business mathematics and statistics introduction to index number introduction to index numbers index numbers applied statistics

  1. Forecasting

  2. Fixed prices

  3. Different prices

  4. Constant prices

Show answer
Correct Option: A
Explanation:

Index number can be used for Forecasting.
This index number is a useful number that helps us quantify changes in our field. It is easier to see one value than a thousand different values for each item in our field.

How many types are used for the calculation of index numbers:

business mathematics and statistics introduction to index number introduction to index numbers index numbers applied statistics

  1. $2$

  2. $3$

  3. $4$

  4. $5$

Show answer
Correct Option: A
Explanation:

$\Rightarrow$  There are $Two$ types used for the calculation of index numbers.

$\Rightarrow$  Types of calculating index numbers are :
$(1)$  Simple Aggregative Method.
$(2)$  Simple Average of price relative method.

An index number is called a simple index when it is computed from: 

business mathematics and statistics introduction to index number introduction to index numbers index numbers applied statistics

  1. Single variable

  2. Bi-variable

  3. Multiple variables

  4. None of them

Show answer
Correct Option: A
Explanation:

$\Rightarrow$  An index number is called a simple index when it is computed from : $Single\, variable$.

$\Rightarrow$  Simple index numbers grant equal importance to all items no matter what share it has. In other words, it considers each item to be equal with respect to the given variable. 
$\Rightarrow$  A simple index number is a number that measures a relative change in a single variable with respect to a base.

Consumer price index indicates:

business mathematics and statistics introduction to index number introduction to index numbers index numbers applied statistics

  1. Rise

  2. Fall

  3. Both (a) and (b)

  4. Neither (a) and (b)

Show answer
Correct Option: C
Explanation:

The Consumer Price Index (CPI) indicates the measure of the average change over time in the prices paid by consumers for a market basket of consumer goods and services.

It indicates both Rise and Fall in the price.