69 + Interview Questions in INDEX NUMBERS IN GENERAL AWARENESS Page 2 InterviewSolution

51.	Mention the characteristics of index number.
Answer» Index numbers: Are specialised averages. Are expressed in ratios but expressed in percentages. Study the effect of factors which cannot be measured directly. Facilitates comparision.

51.

Mention the characteristics of index number.

Answer»

Index numbers:

Are specialised averages.
Are expressed in ratios but expressed in percentages.
Study the effect of factors which cannot be measured directly.
Facilitates comparision.

52.	What is meant by composite index number?
Answer» The index number being constructed for group of items is a composite index number.

Discussion

53.	What test is satisfied by Marshall-Edge worth’s Index number?
Answer» Timer reversal test.

Discussion

54.	What is meant by fixed base and chain base in index number?
Answer» If the period of comparision is fixed for any current year, is called as fixed base year. If the period of comparision is immediate preceeding period for any current year, is called chain base year.

54.

What is meant by fixed base and chain base in index number?

Answer»

If the period of comparision is fixed for any current year, is called as fixed base year.

If the period of comparision is immediate preceeding period for any current year, is called chain base year.

Discussion

55.	Define value Index number.
Answer» Value Index number indicate the effect of combination of price and quantity changes in between the two periods.

Discussion

56.	Define price Index numbers.
Answer» Price Index numbers indicates the general level of prices of articles over a period of time.

Discussion

57.	What is normal Base year?
Answer» Normal Base year is the year in which in that year there are no accidents / natural calamities occurred, which affect the business and economic activities. (OR) Normal base year is the year in which in that year there are no wars, floods, famine, tsunami, strikes etc.

57.

What is normal Base year?

Answer»

Normal Base year is the year in which in that year there are no accidents / natural calamities occurred, which affect the business and economic activities.

(OR)

Normal base year is the year in which in that year there are no wars, floods, famine, tsunami, strikes etc.

Discussion

58.	Give the meaning of Base year.
Answer» The year against which comparisions are made is called base year.

Discussion

59.	If total value in base year and current year are respectively 800, and 1000, compute value Index number.
Answer» Value 1.NO. V₀₁ = \(\frac{∑p_1q_0}{∑p_0q_0} \times 100\) = \(\frac{1000}{800}\) × 1000 = 125

59.

If total value in base year and current year are respectively 800, and 1000, compute value Index number.

Answer»

Value 1.NO. V₀₁ = \(\frac{∑p_1q_0}{∑p_0q_0} \times 100\)

= \(\frac{1000}{800}\) × 1000

= 125

Discussion

60.	What are quantity weights and value weights?
Answer» A quantity weight is the amount of commodity used or produced during a period. A value weight is the product of price and quantity used during a period.

Discussion

61.	Define base year and current year in index number.
Answer» The year selected for comparision is the base year and the year for which comparisons are required is the current year.

Discussion

62.	If the general price level goes up by 80% between 2002 and 2012, What is the index number for 2012 with base 2000?
Answer» Index number for the year 2012 = 180.

Discussion

63.	Explain Time Reversal Test and Factor Reversal Tests,
Answer» Time Reversal Test: (TRT) : This test requires that the index number computed backwards should be the reciprocal of the index number computed forward, except the factor 100. i.e. P₀₁ = \(\frac{1}{P_{10}}\) OR P₀₁ × P₁₀ = 1 (Except the factor 100) Factor Reversal Test:- This test requires that the product of the Price Index number and the Quantity Index number should be equal to the net change in the value taking place between two periods, except the factor 100. i.e. P₀₁× Q₀₁ = \(\frac{∑P_1q_1}{∑p_0q_0}\) = V₀₁(Except the factor 100).

63.

Explain Time Reversal Test and Factor Reversal Tests,

Answer»

Time Reversal Test: (TRT) : This test requires that the index number computed backwards should be the reciprocal of the index number computed forward, except the factor 100.

i.e. P₀₁ = \(\frac{1}{P_{10}}\) OR P₀₁ × P₁₀ = 1 (Except the factor 100)

Factor Reversal Test:- This test requires that the product of the Price Index number and the Quantity Index number should be equal to the net change in the value taking place between two periods, except the factor 100.

i.e. P₀₁× Q₀₁ = \(\frac{∑P_1q_1}{∑p_0q_0}\) = V₀₁(Except the factor 100).

Discussion

64.	Write down the formula for calculating purchasing power of money?
Answer» Purchase Power of Money = \(\frac{1}{cost \,of\,living\,index}\)

64.

Write down the formula for calculating purchasing power of money?

Answer»

Purchase Power of Money

= \(\frac{1}{cost \,of\,living\,index}\)

Discussion

65.	Write down the formula for calculating real wages.
Answer» Real wages = \(\frac{money\,wages}{cost\;of\,living\,index}\)

Discussion

66.	Which index number is used to calculate the purchasing power of money and real wages?
Answer» Consumer price index (CPI)

Discussion

67.	Define consumer price/cost of living index number.
Answer» “Cost of living index number is the index number of the cost met by a Specified class of consumers in buying a basket of goods and services.”

Discussion

68.	If cost of living Index number of 2005 is 225 with 1995 as a base year, what is the change in the Index?
Answer» The percentage change in consumer prices is 125%.

Discussion

69.	Given Σp1q0 = 100 and Σ p0q0 =102 find a suitable index number.
Answer» Laspeyre’s Price Index Number P₀₁ = \(\frac{∑p_1q_0}{∑p_0q_0}\) × 100 = \(\frac{100}{102}\) × 100 = 98.04 01.

69.

Given Σp1q0 = 100 and Σ p0q0 =102 find a suitable index number.

Answer»

Laspeyre’s Price Index Number

P₀₁ = \(\frac{∑p_1q_0}{∑p_0q_0}\) × 100 = \(\frac{100}{102}\) × 100

= 98.04 01.

Discussion

Explore topic-wise InterviewSolutions in .

Mention the characteristics of index number.

What is meant by composite index number?

What test is satisfied by Marshall-Edge worth’s Index number?

What is meant by fixed base and chain base in index number?

Define value Index number.

Define price Index numbers.

What is normal Base year?

Give the meaning of Base year.

If total value in base year and current year are respectively 800, and 1000, compute value Index number.

What are quantity weights and value weights?

Define base year and current year in index number.

If the general price level goes up by 80% between 2002 and 2012, What is the index number for 2012 with base 2000?

Explain Time Reversal Test and Factor Reversal Tests,

Write down the formula for calculating purchasing power of money?

Write down the formula for calculating real wages.

Which index number is used to calculate the purchasing power of money and real wages?

Define consumer price/cost of living index number.

If cost of living Index number of 2005 is 225 with 1995 as a base year, what is the change in the Index?

Given Σp1q0 = 100 and Σ p0q0 =102 find a suitable index number.