1.

Fisher’s Formula is called the Ideal Formula. Why?

Answer»

Fisher‘s formula is called the ideal because of the following reasons: 

(i) It is based on geometric mean which is considered best for constructing index numbers. 

(ii) It fulfills both the time reversal and factor reversal tests. 

(iii) It takes into account both current year as well as base year     prices and quantities. 

(iv) It is free from bias. 



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