Which pair of tests is satisfied by Fisher's ideal index?
Correct answer: C. Time reversal and factor reversal tests
- A. Unit and circular tests
- B. Fixed base and chain tests
- C. Time reversal and factor reversal tests
- D. Trend and proportionality tests
Explanation
Fisher's ideal index satisfies both the time reversal test and the factor reversal test. These properties are major reasons it is regarded as an ideal index number.
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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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