Index Numbers

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| By Sweetsalman123
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Sweetsalman123
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Quizzes Created: 48 | Total Attempts: 91,737
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  • 1/44 Questions

    A series of numerical figures which show the relative position is called 

    • Index no.
    • Relative no.
    • Absolute no.
    • None
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Number Quizzes & Trivia
About This Quiz

This quiz on 'Index Numbers' assesses understanding of their construction and usage in statistics, focusing on relative changes, the role of weights, and the importance of the geometric mean. It's designed for learners interested in economic and statistical analysis.

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  • 2. 

    Index no. for the base peroid is always taken as 

    • 200

    • 50

    • 1

    • 100

    Correct Answer
    A. 100
    Explanation
    The index number for the base period is always taken as 100 because the base period is used as a reference point to compare the changes in the price level over time. By setting the index number for the base period as 100, it becomes easier to calculate the percentage changes in the price level for subsequent periods. This allows for a standardized and consistent measure of inflation or deflation.

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  • 3. 

    ____________ play a very important part in the construction of index nos.

    • Weights

    • Classes

    • Estimations

    • None

    Correct Answer
    A. Weights
    Explanation
    Weights play a very important part in the construction of index numbers. Index numbers are used to measure changes in variables over time, such as inflation or stock market performance. In order to calculate an index number, different variables need to be given different weights based on their relative importance. These weights reflect the significance of each variable in the overall index. Therefore, weights are crucial in determining the accuracy and reliability of index numbers by ensuring that the index reflects the true changes in the variables being measured.

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  • 4. 

    _______________ is particularly suitable for the construction of index nos.

    • H.M.

    • A.M.

    • G.M.

    • None

    Correct Answer
    A. G.M.
    Explanation
    The Geometric Mean (G.M.) is particularly suitable for the construction of index numbers because it takes into account the relative changes in the values being compared. Index numbers are used to measure the average change in a set of values over time, and the G.M. is able to capture the multiplicative nature of these changes. This makes it a more accurate measure for calculating average changes in values such as prices or quantities.

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  • 5. 

    Index nos. show_________ changes rather than absolute amounts of change.  

    • Relative

    • Percentage

    • Both

    • None

    Correct Answer
    A. Percentage
    Explanation
    Index numbers show percentage changes rather than absolute amounts of change. This means that index numbers are used to compare the relative changes in a variable over time or between different groups, rather than measuring the actual amount of change. By using percentages, index numbers allow for easier comparison and analysis of trends, as they provide a standardized measure that is not affected by the scale or units of the variable being measured.

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  • 6. 

    The ___________ makes index nos. time-reversible.    

    • A.M.

    • G.M.

    • H.M.

    • None

    Correct Answer
    A. G.M.
    Explanation
    The geometric mean (G.M.) is the correct answer because it is the only measure out of the options provided that has the property of being time-reversible. The geometric mean is calculated by taking the nth root of the product of n numbers, and this calculation can be reversed by taking the nth power of the product of n numbers. Therefore, the geometric mean is the only measure that can be reversed in time.

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  • 7. 

    Price relative is equal to Options: A. B. C. D.

    • A

    • B

    • C

    • D

    Correct Answer
    A. A
    Explanation
    The correct answer is A. However, since the question does not provide any context or information about what "price relative" refers to, it is not possible to provide a specific explanation for why A is the correct answer. Without more information, it is unclear what A represents in relation to price relative.

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  • 8. 

    Index no.is equal to

    • Sum of price relatives

    • Average of the price relatives

    • Product of price relative

    • None

    Correct Answer
    A. Average of the price relatives
    Explanation
    The index number is calculated by taking the average of the price relatives. This means that the sum of all the price relatives is divided by the total number of price relatives. This method is commonly used to measure changes in prices over time and is a way to represent the overall price level.

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  • 9. 

    The________ of group indices given the General Index

    • H.M.

    • G.M.

    • A.M.

    • None

    Correct Answer
    A. A.M.
    Explanation
    The correct answer is A.M. (Arithmetic Mean). The arithmetic mean is the average value of a set of numbers. In this context, the "group indices" refer to a set of indices within a larger index, and the arithmetic mean of these indices is being compared to the "General Index". This suggests that the arithmetic mean is the appropriate measure to use in order to compare the average value of the group indices to the overall index.

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  • 10. 

    Circular Test is one of the tests of

    • Index nos.

    • Hypothesis

    • Both

    • None

    Correct Answer
    A. Index nos.
    Explanation
    Circular Test is one of the tests of Index nos. This suggests that the Circular Test is specifically related to or a part of the Index nos. It is not related to Hypothesis or both Hypothesis and Index nos. Therefore, the correct answer is Index nos.

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  • 11. 

    ____________ is an extension of time reversal test

    • Factor Reversal test

    • Circular test

    • Both

    • None

    Correct Answer
    A. Circular test
    Explanation
    The circular test is an extension of the time reversal test. This test involves reversing the order of factors in a hypothesis and comparing it to the original hypothesis. If the reversed hypothesis is also true, then it provides additional evidence for the original hypothesis. Therefore, the circular test is a way to further validate the time reversal test and strengthen the evidence for a hypothesis.

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  • 12. 

    Weighted G.M. of relative formula satisfy ____________ test

    • Time Reversal Test

    • Circular test

    • Factor Reversal Test

    • None

    Correct Answer
    A. Time Reversal Test
    Explanation
    The weighted geometric mean (G.M.) of relative formula satisfies the time reversal test. This means that if the values of the variables are reversed or switched, the result of the weighted G.M. of relative formula will also be reversed or switched. In other words, the order of the variables does not affect the outcome of the formula.

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  • 13. 

    Factor Reversal test is satisfied by

    • Fisher's Ideal Index

    • Laspeyres Index

    • Paasches Index

    • None

    Correct Answer
    A. Fisher's Ideal Index
    Explanation
    The Factor Reversal test is satisfied by Fisher's Ideal Index. This index is designed to measure the overall price level and takes into account both current and base period quantities. It is considered ideal because it satisfies the factor reversal test, which means that if the roles of the base and current periods are reversed, the index still yields the same result. In other words, the index is not affected by the choice of base period, making it a reliable measure of price changes over time.

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  • 14. 

    Laspeyre's formula does not obey

    • Factor Reversal Test

    • Time Reversal Test

    • Circular Test

    • None

    Correct Answer
    A. Time Reversal Test
    Explanation
    Laspeyre's formula is a method used to calculate a price index, which compares the price of a basket of goods and services in different time periods. The formula takes into account the quantities consumed in the base period and the prices in the current period. The factor reversal test is a property that a price index should satisfy, which states that reversing the base and current period quantities should result in the reciprocal of the original index. The circular test is another property that a price index should satisfy, which states that the index should not change if the base and current periods are swapped. However, Laspeyre's formula does not satisfy the time reversal test, which means that reversing the base and current periods does not result in the reciprocal of the original index.

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  • 15. 

    A ratio or an average of ratios expressed as a percentage is called

    • A relative no.

    • An absolute no.

    • An index no.

    • None

    Correct Answer
    A. An index no.
    Explanation
    An index number is a ratio or an average of ratios expressed as a percentage. It is used to compare different variables or data sets over time or across different groups. Index numbers are commonly used in economics and statistics to measure changes in prices, quantities, or other variables relative to a base period or reference point. They provide a standardized way of comparing data and can be used to track trends or make comparisons between different time periods or groups.

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  • 16. 

    The value at the base time period serves as the standard point of comparison 

    • False

    • True

    • Both

    • None

    Correct Answer
    A. True
    Explanation
    The statement is true because the value at the base time period is used as a reference point for comparison. It provides a standard or benchmark against which other values or periods can be evaluated. By having a base time period, it becomes easier to analyze changes or trends over time and make meaningful comparisons.

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  • 17. 

    An index time series is a list of_______ nos. for two or more periods of time

    • Index

    • Absolute

    • Relative

    • None

    Correct Answer
    A. Index
    Explanation
    An index time series is a list of index numbers for two or more periods of time. Index numbers are used to compare changes in variables over time, and they represent the relative change in a particular variable compared to a base period. By using index numbers, we can track and analyze the performance or trends of various variables over time, such as stock prices, economic indicators, or consumer price index. Therefore, the correct answer is "Index".

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  • 18. 

    Index nos. are often constructed from the

    • Frequency

    • Class

    • Sample

    • None

    Correct Answer
    A. Sample
    Explanation
    Index numbers are often constructed from a sample. Index numbers are used to measure changes in variables over time, such as inflation or economic indicators. To construct an index number, a sample of data is typically taken and compared to a base period. This allows for the calculation of a relative change or percentage change in the variable being measured. Therefore, the correct answer is "Sample".

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  • 19. 

    ____________ is a point of reference in comparing various data describing individual behaviour  

    • Sample

    • Base period

    • Estimation

    • None

    Correct Answer
    A. Base period
    Explanation
    A base period is a point of reference that is used to compare various data describing individual behavior. It serves as a benchmark against which other data can be measured and analyzed. By using a base period, researchers or analysts can track changes and trends over time, making it easier to identify patterns and understand the impact of different factors on behavior.

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  • 20. 

    The ratio of price of single commodity in a given period to its price in another period is called the  

    • Base period

    • Price ratio

    • Relative price

    • None

    Correct Answer
    A. Base period
    Explanation
    The ratio of price of a single commodity in a given period to its price in another period is called the base period.

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  • 21. 

    When the product of price index and the quantity index is equal to the corresponding value index then

    • Unit Test

    • Time Reversal Test

    • Factor Reversal Test

    • None holds

    Correct Answer
    A. Factor Reversal Test
    Explanation
    When the product of price index and the quantity index is equal to the corresponding value index, it indicates that the change in price and quantity has resulted in a proportional change in the value of the product. This implies that the factor reversal test holds true, which states that if the price and quantity change in opposite directions but the value remains constant, then the factor reversal test is satisfied.

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  • 22. 

    The formula should be independent of the unit in which or for which price and quantities are quoted in

    • Unit Test

    • Time Reversal Test

    • Factor Reversal Test

    • None

    Correct Answer
    A. Unit Test
    Explanation
    The correct answer is Unit Test. In order to ensure the accuracy and reliability of a formula, it should be independent of the unit in which price and quantities are quoted. This means that the formula should be able to produce the same result regardless of whether the price is given in dollars or euros, or whether the quantity is measured in kilograms or pounds. The unit test will help verify that the formula is indeed unit-independent and can handle different units of measurement correctly.

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  • 23. 

    Laspeyre's method and Paasche's method do not satisfy

    • Unit Test

    • Time Reversal Test

    • Factor Reversal Test

    • None

    Correct Answer
    A. Time Reversal Test
    Explanation
    Laspeyre's method and Paasche's method are two commonly used methods for calculating price indices. Both methods have their limitations and do not satisfy the Time Reversal Test. The Time Reversal Test is a property that a price index should satisfy, which states that if all prices and quantities are reversed in time, the index should remain unchanged. In other words, if we reverse the order of the time periods, the index value should not change. This property is important to ensure the consistency and reliability of the price index. Therefore, since Laspeyre's method and Paasche's method do not satisfy this test, they may not be suitable for certain applications where the Time Reversal Test is crucial.

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  • 24. 

    The purpose determines the type of index no. to use

    • Yes

    • No

    • May be

    • May not be

    Correct Answer
    A. Yes
    Explanation
    The purpose of using an index in a database determines the type of index to use. Different types of indexes, such as B-tree, hash, or bitmap indexes, are designed to optimize specific types of queries or data access patterns. For example, if the purpose is to improve the performance of range queries, a B-tree index would be suitable. If the purpose is to quickly locate specific values, a hash index may be more appropriate. Therefore, the purpose of the index does determine the type of index to use.

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  • 25. 

    The index no. is a special type of average

    • False

    • True

    • Both

    • None

    Correct Answer
    A. True
    Explanation
    The statement is true because an index number is a statistical measure that represents the average value of a group of data points relative to a base value. It is used to compare changes in variables over time or between different groups. Index numbers are commonly used in economics, finance, and other fields to track and analyze trends. Therefore, the statement accurately describes the nature of an index number as a special type of average.

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  • 26. 

    The choice of suitable base period is at best temporary solution

    • True

    • False

    • Both

    • None

    Correct Answer
    A. True
    Explanation
    The statement suggests that choosing a suitable base period is only a temporary solution. This implies that although selecting a base period may be helpful in the short term, it may not be a long-term or permanent solution. It implies that there may be other factors or variables that need to be considered in order to fully address the issue at hand. Therefore, the correct answer is True.

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  • 27. 

    Fisher's Ideal Formula for calculating index nos. satisfies the________ tests

    • Units Test

    • Factor Reversal Test

    • Both

    • None

    Correct Answer
    A. Both
    Explanation
    Fisher's Ideal Formula for calculating index numbers satisfies both the Units Test and the Factor Reversal Test. The Units Test ensures that the index number is unaffected by changes in the unit of measurement, while the Factor Reversal Test ensures that multiplying all the quantities by a constant factor does not change the index number. Therefore, Fisher's Ideal Formula passes both of these tests, making the answer "Both" correct.

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  • 28. 

    Fisher's Ideal Formula dose not satisfy__________ test

    • Unit test

    • Circular Test

    • Time Reversal Test

    • None

    Correct Answer
    A. Circular Test
    Explanation
    Fisher's Ideal Formula does not satisfy the Circular Test. The Circular Test is a statistical test used to determine if the residuals from a regression model are autocorrelated or not. Autocorrelation occurs when the residuals of a model are correlated with each other over time. Fisher's Ideal Formula is a statistical method used for combining p-values from multiple tests, and it does not take into account the autocorrelation structure of the data. Therefore, it is not suitable for use when autocorrelation is present, making it fail the Circular Test.

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  • 29. 

    Satisfies circular test

    • G.M. of price relatives or the weighted aggregate with fixed weights

    • A.M. of price relatives or the weighted aggregate with fixed weights

    • H.M. of price relatives or the weighted aggregate with fixed weights

    • None

    Correct Answer
    A. G.M. of price relatives or the weighted aggregate with fixed weights
    Explanation
    The correct answer is G.M. of price relatives or the weighted aggregate with fixed weights. This means that the method of calculating the price index involves either taking the geometric mean of the price relatives or using a weighted average with fixed weights. Both of these methods are commonly used in calculating price indices to account for changes in prices over time.

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  • 30. 

    Laspeyre's and Paasche's method_________ time reversal test

    • Satisfy

    • Do not satisfy

    • Are

    • Are not

    Correct Answer
    A. Do not satisfy
    Explanation
    Laspeyre's and Paasche's method do not satisfy the time reversal test. The time reversal test is a criterion used to determine the consistency of price index numbers. According to this test, if the index numbers are calculated in the reverse order using the same data, they should yield the reciprocal of each other. However, Laspeyre's and Paasche's methods do not meet this criterion and therefore do not satisfy the time reversal test.

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  • 31. 

    There is no such thing as unweighted index numbers

    • False

    • True

    • Both

    • None

    Correct Answer
    A. False
    Explanation
    The given statement is false. Unweighted index numbers do exist. Index numbers are used to measure changes in a variable over time. Weighted index numbers give different weights to different components of the variable, while unweighted index numbers give equal weight to all components. Both weighted and unweighted index numbers are used in various fields such as economics, finance, and statistics. Therefore, the statement that there is no such thing as unweighted index numbers is incorrect.

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  • 32. 

    Theoretically, G.M. is the best average in the construction of index nos. but in practice, mostly the A.M. is used

    • False

    • True

    • Both

    • None

    Correct Answer
    A. True
    Explanation
    In theory, the geometric mean (G.M.) is considered the best average when constructing index numbers. This is because it takes into account the compounding effect of percentage changes over time. However, in practice, the arithmetic mean (A.M.) is often used instead. This is because the calculation of the G.M. can be more complex and time-consuming compared to the A.M. Additionally, the A.M. is easier to understand and interpret for most people. Therefore, even though the G.M. is theoretically superior, the A.M. is more commonly used in practice.

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  • 33. 

    Laspeyre's or Paasche's or the Fisher's ideal index do not satisfy

    • Time Reversal Test

    • Unit Test

    • Circular Test

    • None

    Correct Answer
    A. Circular Test
    Explanation
    The correct answer is "Circular Test". This means that Laspeyre's, Paasche's, and Fisher's ideal index do not satisfy the circular test. The circular test is a property that an index number formula should satisfy, which states that if the prices and quantities of a set of goods are reversed, the index number should also be reversed. In other words, if the prices and quantities are swapped, the index number should remain the same.

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  • 34. 

    ___________ is concerned with the measurement of price changes over a period of years,when it is desirable to shift the base

    • Unit Test

    • Circular Test

    • Time Reversal Test

    • None

    Correct Answer
    A. Circular Test
    Explanation
    The correct answer is Circular Test. The circular test is concerned with the measurement of price changes over a period of years when it is desirable to shift the base. This test involves comparing the current year's prices with the prices of a previous year, and then comparing the prices of the previous year with the prices of another year. This allows for the measurement of price changes over time and the shifting of the base year if necessary.

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  • 35. 

    The test of shifting the base is called

    • Unit Test

    • Time Reversal Test

    • Circular Test

    • None

    Correct Answer
    A. Circular Test
    Explanation
    The term "shifting the base" suggests that the test involves changing or rotating the base or starting point. The option "Circular Test" implies a circular or cyclical movement, which aligns with the idea of shifting the base. Therefore, the correct answer is "Circular Test."

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  • 36. 

    The no. of test of Adequacy is

    • 2

    • 5

    • 3

    • 4

    Correct Answer
    A. 4
    Explanation
    The number of tests of adequacy is determined by the specific requirements or criteria that need to be met in order to determine if something is adequate. In this case, the correct answer is 4, indicating that there are four tests that need to be conducted to assess adequacy. Without further information, it is not possible to determine what these tests are or what they are assessing for adequacy.

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  • 37. 

    We use price index numbers

    • To measure and compare prices

    • To measure prices

    • To compare prices

    • None

    Correct Answer
    A. To measure and compare prices
    Explanation
    Price index numbers are used to measure and compare prices. They provide a way to track changes in the overall price level of goods and services over time. By using price index numbers, we can analyze and compare the prices of different products or services in a standardized manner, allowing for meaningful comparisons to be made. This helps in understanding inflation, making economic forecasts, and making informed decisions regarding pricing and purchasing.

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  • 38. 

    Simple aggregate of quantities is a type of  

    • Quantity control

    • Quantity indices

    • Both

    • None

    Correct Answer
    A. Quantity indices
    Explanation
    Quantity indices refer to a statistical measure used to compare the changes in the quantity of a particular item over time. It involves calculating the ratio of the quantity in a given period to the quantity in a base period, and expressing it as a percentage or index number. Simple aggregate of quantities, on the other hand, refers to the sum or total of quantities without any comparison or indexing. Therefore, the correct answer is "Quantity indices" as it specifically refers to the type of measurement mentioned.

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  • 39. 

    The formula for conversion is current value Options: A. B. C. D.

    • A

    • B

    • C

    • D

    Correct Answer
    A. A
    Explanation
    The given question does not provide any context or information about what is being converted or what the current value is. Therefore, it is not possible to provide a meaningful explanation for the correct answer.

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  • 40. 

    Question No Image

    • True

    • False

    • Both

    • None

    Correct Answer
    A. True
  • 41. 

    Question No Image

    • Relative price index

    • Simple Aggregative Price Index

    • Both

    • None

    Correct Answer
    A. Simple Aggregative Price Index
    Explanation
    The answer is "Simple Aggregative Price Index" because the question is asking for a type of price index, and the options provided are "Relative price index," "Simple Aggregative Price Index," "Both," and "None." Therefore, the correct answer is "Simple Aggregative Price Index."

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  • 42. 

     is the index for time

    • 1 on 0

    • 0 on 1

    • 1 on 1

    • 0 on 0

    Correct Answer
    A. 1 on 0
    Explanation
    The given answer "1 on 0" suggests that at index 1, the value is 1 and at index 0, the value is 0. This implies that there is a change in value from 0 to 1 at index 1.

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  • 43. 

     is the index for time

    • 1 on 0

    • 0 on 1

    • 1 on 1

    • 0 on 0

    Correct Answer
    A. 0 on 1
    Explanation
    The given sequence of "on" and "off" states represents a binary code. In this code, "1" represents the "on" state and "0" represents the "off" state. The phrase "0 on 1" indicates that the code switches from the "off" state to the "on" state. Therefore, the correct answer is the sequence "0 on 1".

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  • 44. 

    Chain index is equal to Options: A. B. C. D.

    • A

    • B

    • C

    • D

    Correct Answer
    A. C

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  • Current Version
  • Mar 21, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Mar 13, 2012
    Quiz Created by
    Sweetsalman123

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