Explain the significance of index numbers. – InterviewSolution

1.	Explain the significance of index numbers.
Answer» Index numbers are important in economic statistics. In simple terms, an index (or index number) is a number displaying the level of a variable relative to its level (set equal to 100) in a given base period. Index numbers are intended to study the change in the effects of such factors which cannot be measured directly.

Discussion

No Comment Found

Related InterviewSolutions

Describe the uses of index number. What considerations are taken into account while selecting the base year for the preparation of an index number ?
What are the considerations underlying the choice of base period in the constructions of an index number?
What is the difference between a price index and a quantity index ?
Price Relatives `=("Current Year Price")/(?)xx100`A. Reference year priceB. Periodic year priceC. Base year priceD. both (a) and (c)
Rate of inflation is equal to: [A = Price index]A. `(A_(1))/(A_(2)+A_(1))xx100`B. `(A_(2)+A_(1))/(A_(1))xx100`C. `(A_(1))/(A_(2)-A_(1))xx100`D. `(A_(2)-A_(1))/(A_(1))xx100`
Consumer Price Index is also known as:A. Industrial Production IndexB. Cost of Living IndexC. Wholesale Price IndexD. none of these
Explain the significance of index numbers.
State the major commodity groups in the Consumer Price Index for Industrial Workers in India.
Why do we need an index number ?
State one principal limitation of index numbers.