In the chain-base method, each year's index is generally compared with:
Correct answer: D. The immediately preceding year
- A. The original base year
- B. The final year in the series
- C. The average of all years
- D. The immediately preceding year
Explanation
The chain-base method links successive short-term relatives, so each year is compared with the preceding year. A fixed-base index compares every year with one unchanged base year.
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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.
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