Free Index Numbers and Time Series MCQs with Answers

• A. Simple average of relatives
• B. Average of weights
• C. Weighted average of relatives
• D. All of above

Explanation: The household budget method calculates CPI as a weighted average of price relatives, with household expenditure shares serving as weights.

• A. Household price index
• B. Retail price index
• C. Both a and b
• D. None of these

Explanation: CPI is commonly called the retail price index because it measures changes in prices paid by consumers, and it may also be described as a…

• A. Quantity index number
• B. Price index number
• C. Value index number
• D. None of these

Explanation: Price index numbers are most widely used because they measure changes in the general price level and inflation.

• A. Place
• B. Yearly
• C. Time
• D. None

Explanation: A time series arranges observations in chronological order, such as daily, monthly, or yearly values.

• A. Regards the base year quantities as fixed
• B. Regards the base year price as fixed
• C. Regards the current year quantities as fixed
• D. non of these

Explanation: The Laspeyres index uses base-year quantities as weights while comparing prices between periods.

• A. To measure changes in quantity
• B. To measure changes in price
• C. To measure changes in a variable over time
• D. To measure changes in demand

Explanation: An index number expresses the relative change in a variable, or group of variables, over time using a reference period.

• A. Taking A.M. of Laspeyre's and Paasche's index
• B. Taking G.M. of Laspeyre's and Paasche's index
• C. Both (a) and (b)
• D. None of these

Explanation: Fisher's ideal index is the geometric mean of the Laspeyres and Paasche indices: √(L × P). The arithmetic mean is not Fisher's formula.

• A. Laspeyre's index
• B. Paasche's index
• C. Fisher's index
• D. None of these

Explanation: Laspeyres uses base-year quantities, q₀, as weights, so it measures the cost of the base-period basket at current prices.

• A. ∑pn(Po + Pn)/ ∑pn (Po + Pn)
• B. ∑qn(qo + qn)/∑qn(po + pn) x100
• C. ∑pn(qo + qn)/∑pn
• D. ∑qn(Po + Pn)/ ∑qo (Po + Pn) x100

Explanation: The Marshall-Edgeworth volume index uses the average of base- and current-period prices as weights: Σqₙ(p₀+pₙ) divided by Σq₀(p₀+pₙ)…

• A. Wholesale
• B. Relatives
• C. commodities
• D. Time series

Explanation: Seasonal and cyclical movements are types of variation studied in time series.

• A. Yearly
• B. Basely
• C. Timely
• D. Averagely

Explanation: A weighting system changes with time when the relative importance or consumption pattern of items changes across periods.

• A. Pn/Po x 100
• B. Pn/Po x 100
• C. Pn/ Pn-1 x100
• D. Pn/P1 x 100

Explanation: A link relative compares the current period with the immediately preceding period, so it is Pₙ/Pₙ₋₁ × 100.

• A. Overall
• B. Same
• C. Variation
• D. Capable

Explanation: An index number condenses the overall change in one or more related variables into a single figure, usually relative to a base period.

• A. Index Number
• B. Special purpose
• C. Reliable
• D. Scope

Explanation: The objective of constructing an index determines its scope, including the variables, items, population and period covered.

• A. Three
• B. Two
• C. Four
• D. One

Explanation: Index numbers commonly use three types of averages: arithmetic mean, geometric mean and harmonic mean.

• A. Paasche's Index Number
• B. Marshall and Laspeyr'es
• C. Laspeyre's and Paasche's
• D. Fisher and Paasche's

Explanation: Fisher's index is the geometric mean of the Laspeyres and Paasche indices, calculated as the square root of their product.

• A. Cost Living Index number
• B. Whole Sale Index number
• C. weighted Index Number
• D. Consumer Index Number

Explanation: The Consumer Price Index tracks changes in the prices of goods and services purchased by consumers, so it is also called the Cost of…

• A. Kind
• B. Chain relative
• C. Purpose
• D. Price

Explanation: An index number is designed for a particular objective, such as measuring prices, quantities or the cost of living, so no single index…

• A. Change a simple index to a weight index
• B. Convert the Paasche index to a Laspeyres index
• C. Change the base year
• D. change an aggregate index to a weighted index

Explanation: Multiplying an index by a scaling factor changes its reference base while preserving the measured relative movement.

• A. The Laspeyres price index
• B. The Paasche quantity index
• C. The Laspeyres quantity index
• D. The Paasche price index

Explanation: The formula uses current quantities, qn, valued at base-period prices, p0, and compares them with base quantities valued at p0.