Which feature is most suitable for selecting a base year for an index number?
Correct answer: B. A normal and stable year
- A. An unusually prosperous year
- B. A normal and stable year
- C. An unusually depressed year
- D. The latest available year
Explanation
A normal and stable year provides a representative basis for comparison. An unusually high or low year can distort the movements shown by the index.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
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.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Quantitative Methods questions like this
Quantitative Methods is on this paper prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for it.
More Index Numbers questions
An index number primarily measures which type of change?
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?
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:
A major limitation of a fixed-base index is that it may: