An index number primarily measures which type of change?
Correct answer: A. Relative change over time or place
- A. Relative change over time or place
- B. Absolute change in one variable
- C. Association between two variables
- D. Variation around an average
Explanation
An index number expresses the relative change in a variable or group of variables, usually with the base period set equal to 100. Absolute change gives the actual difference, not the proportional movement.
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About Index Numbers
Index numbers measure relative changes in prices, quantities or values over time using a base period. Work includes simple and weighted price indices, aggregate methods, consumer price calculations, percentage change and purchasing power, with attention to choosing a base year and interpreting an index rather than treating it as an absolute amount.
Practise Index Numbers
30 free Index Numbers MCQs from Quantitative Methods, each with the correct answer and an explanation. Unlimited attempts, no account needed.
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More Index Numbers questions
An index for 2018 is 120 and an index for 2020 is 150, both with 2015 as the base year. What is the 2020 index with 2018 as the base year?
Which pair of tests is satisfied by Fisher's ideal index?
A value index is calculated using which combination of values?
Which feature is most suitable for selecting a base year for an index number?
In Paasche's quantity index, quantities of the current period are weighted by:
In the chain-base method, each year's index is generally compared with: