What is index number? Mention any three advantages of index number.

1.	What is index number? Mention any three advantages of index number.
Answer» Answer: An index number is the MEASURE of change in a variable (or group of variables) over TIME. ... Index numbers are one of the most used statistical tools in ECONOMICS. Index numbers are not directly measurable, but represent general, relative changes. They are typically EXPRESSED as percents. Index number helps to know the inflation rate by measuring price LEVEL and value of money between two periods. It helps Central Bank in deciding credit policy. Helps in adjustment in salaries and allowances: Index number helps to determine wages and allowance of employees.

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Answer:

An index number is the MEASURE of change in a variable (or group of variables) over TIME. ... Index numbers are one of the most used statistical tools in ECONOMICS. Index numbers are not directly measurable, but represent general, relative changes. They are typically EXPRESSED as percents.

Index number helps to know the inflation rate by measuring price LEVEL and value of money between two periods.
It helps Central Bank in deciding credit policy.
Helps in adjustment in salaries and allowances: Index number helps to determine wages and allowance of employees.

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What is index number? Mention any three advantages of index number.

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