All Free Quantitative Methods MCQs with Answers

• A. Σp1q1 ÷ Σp0q0 × 100
• B. Σp1q0 ÷ Σp0q0 × 100
• C. Σp1q1 ÷ Σp1q0 × 100
• D. Σp0q1 ÷ Σp0q0 × 100

Explanation: Laspeyres' price index compares current prices with base-period quantities held constant.

• A. 115.00
• B. 120.00
• C. 123.33
• D. 125.00

Explanation: The index is calculated as (12 + 25) ÷ (10 + 20) × 100, which equals 123.33.

• A. 80
• B. 100
• C. 120
• D. 125

Explanation: The price relative is current price divided by base price, multiplied by 100.

• A. 132
• B. 136
• C. 138
• D. 142

Explanation: The weighted average is (120 × 4 + 150 × 6) ÷ (4 + 6) = 138. The larger weight assigned to the second commodity pulls the result closer to…

• A. Rs. 38,000
• B. Rs. 42,500
• C. Rs. 40,000
• D. Rs. 45,000

Explanation: Real income equals money income divided by the price index expressed as a ratio: 50,000 ÷ 1.25 = Rs. 40,000.

• A. 120.00
• B. 125.00
• C. 128.57
• D. 132.50

Explanation: Using base quantities, the numerator is (5 × 10) + (8 × 5) = 90 and the denominator is (4 × 10) + (6 × 5) = 70.

• A. Current-period quantities
• B. Base-period quantities
• C. Average-period quantities
• D. Fixed standard quantities

Explanation: Paasche's price index uses current-period quantities as weights while comparing current and base prices.

• A. Current prices and base quantities
• B. Current prices and current quantities
• C. Base prices and current quantities
• D. Base prices and base quantities

Explanation: A value index compares total current-period value with total base-period value, so each value uses the prices and quantities of its own…

• 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.

• A. 120.00
• B. 125.00
• C. 130.00
• D. 135.00

Explanation: To shift the base to 2018, divide the 2020 index by the 2018 index and multiply by 100: 150 ÷ 120 × 100 = 125.

• 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.

• 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.

• A. Base-period prices
• B. Average-period prices
• C. Current-period prices
• D. Base-period quantities

Explanation: Paasche's quantity index uses current-period prices as weights when comparing quantities.

• 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. Use no reference period
• B. Always produce a value below 100
• C. Prevent comparison with the base year
• D. Become less representative over time

Explanation: Consumer habits, technology and available products may change, making an old fixed basket less representative.

• A. Expenditure shares of families
• B. Physical quantities produced
• C. Profits earned by retailers
• D. Tax rates on commodities

Explanation: The family-budget method assigns weights according to the relative expenditure of households on different groups of goods and services.

• A. Increase in the same proportion
• B. Remain fixed at the base value
• C. Decrease in the same proportion
• D. Become equal to the price index

Explanation: Purchasing power moves inversely with the price level. When prices rise, the same monetary unit buys fewer goods and services, so its…

• A. To calculate the number of observations
• B. To convert real values into nominal values
• C. To remove seasonal variation only
• D. To convert nominal values into real values

Explanation: Deflation removes the effect of general price changes so that values from different periods can be compared in real terms.

• A. The average of base and current quantities
• B. Only current-period quantities
• C. Only base-period quantities
• D. The difference between the two quantities

Explanation: The Marshall-Edgeworth index weights prices by the sum or average of base-period and current-period quantities.

• A. Its price and quantity indexes should be equal
• B. Its two time directions should give reciprocal results
• C. Its index should remain below 100
• D. Its base-year quantities should remain unchanged

Explanation: The time-reversal test requires that reversing the base and current periods produces reciprocal index values, subject to the chosen scale.