Index Numbers

  • Methods of Consumer Price Index Numbers

    There are two methods for the compute of consumer price index numbers. (a) Aggregate expenditure method (2) Family Budget Method Aggregate Expenditure Method: In this method, the quantities of commodities consumed by the particular group in the base year are estimated and these figures or their proportions are used as weights. Then the total expenditure […]

  • Consumer Price Index Numbers

    Consumer price index number is measured the changes in the prices paid by the consumers for purchasing a special “basket” of goods and services during the current year as compared to the base year. The basket of goods and services will contain items like (1) Food (2) House Rent (3) Clothing (4) Fuel and Lighting […]

  • Wholesale Price Index Numbers

    The wholesale price index numbers indicate the general condition of the national economy. They measure the change in prices of products produced by different sectors of an economy. The wholesale prices of major items manufactured or produced are included in the construction of these index numbers. The federal bureau of statistics has been constructing and […]

  • Weighted Index Numbers

    When all commodities are not of equal importance. We assign weight to each commodity relative to its importance and index number computed from these weights is called weighted index numbers. Laspeyre’s Index Number: In this index number the base year quantities are used as weights, so it also called base year weighted index. Paasche’s Index […]

  • Unweighted Index Numbers

    There are two methods of constructing unweighted index numbers. (1) Simple Aggregative Method (2) Simple Average of Relative Method Simple Aggregative Method: In this method, the total of the prices of commodities in a given (current) years is divided by the total of the prices of commodities in a base year and expressed as percentage. […]

  • Chain Base Method

    In this method, there is no fixed base period. The year immediately preceding the one for which price index have to be calculated is assumed as the base year. Thus, for the year1994 the base year would be 1993, for 1993 it would be 1992 for 1992 it would be 1991 and so on. In […]

  • Fixed Base Method

    In fixed base method, a particular year is generally chosen arbitrarily and the prices of the subsequent years are expressed as relatives of the prices of the base year. Sometimes instead of choosing a single year as the base, a period of a few years is chosen and the average price of this period is […]

  • Construct Price Index Numbers

    The following steps are considered for the construction of price index numbers: Object: The first and the most important steps in the construction of index numbers is to decide the object for making the index numbers of prices. The prices may be retail or whole-sale. The index numbers of retail prices are called the consumer […]

  • Limitations of Index Numbers

    They are simply rough indications of the relative changes. The choice of representative commodities may lead to fallacious conclusions as they are based on samples. There may be errors in the choice of base periods or weights etc. Comparisons of changes in variables over long periods are not reliable. They may be useful for one […]

  • Uses of Index Numbers

    The main uses of index numbers are given below: Index numbers are used in the fields of commerce, meteorology, labour, industrial, etc. The index numbers measure fluctuations during intervals of time, group differences of geographical position of degree etc. They are used to compare the total variations in the prices of different commodities in which […]

  • Index Numbers and Types of Index Numbers

    Introduction: Index numbers are meant to study the change in the effects of such factors which cannot be measured directly. According to Bowley, “Index numbers are used to measure the changes in some quantity which we cannot observe directly”. For example, changes in business activity in a country are not capable of direct measurement but […]