Define Family Budget Method.

1.	Define Family Budget Method.
Answer» Family Budget Method: In this method, the weights are calculated by multiplying the prices and quantity of the base year. (i.e.) V = Σp₀ q₀ . The formula is given by, Cost of Living Index Number = ∑PV / ∑V where P = P₁/P₀x 100 is the price relative V = Σp₀q₀ is the value relative

Answer»

Family Budget Method:

In this method, the weights are calculated by multiplying the prices and quantity of the base year.

(i.e.) V = Σp₀ q₀ . The formula is given by,

Cost of Living Index Number = ∑PV / ∑V

where P = P₁/P₀x 100 is the price relative

V = Σp₀q₀ is the value relative

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