State with reasons whether you agree or disagree with the following st

1.	State with reasons whether you agree or disagree with the following statements:Index Numbers can be constructed without the base year.
Answer» No, I do not agree with this statement. Index numbers can be constructed without the base year because : Index Numbers are the tools for measuring the changes in the magnitude of a variable or a group of variables over time with respect to a chosen year. Prices of some goods may increase and of other may decrease during the two periods. Index numbers solves this problem by taking the average change. For example, to know cost of living of people in general in India, Government chooses a base year 2010 which is taken as 100. Then cost of living is calculated in 2019 which may be 140. This difference of 40(140-100) shows that cost of living in India has increased by 40% since 2010. Hence, Index Numbers cannot be constructed – without the base year.

State with reasons whether you agree or disagree with the following statements:Index Numbers can be constructed without the base year.

Answer»

No, I do not agree with this statement.

Index numbers can be constructed without the base year because :

Index Numbers are the tools for measuring the changes in the magnitude of a variable or a group of variables over time with respect to a chosen year.
Prices of some goods may increase and of other may decrease during the two periods. Index numbers solves this problem by taking the average change.
For example, to know cost of living of people in general in India, Government chooses a base year 2010 which is taken as 100. Then cost of living is calculated in 2019 which may be 140.
This difference of 40(140-100) shows that cost of living in India has increased by 40% since 2010.

Hence, Index Numbers cannot be constructed – without the base year.