Q.Explain the important uses of index numbers in economic analysis.

An index number is a statistical device showing the relative change in a variable (or group of variables) like prices or production between a current period and a base period, with the base taken as 100. It is called an 'economic barometer'.

This is a 2-mark short note in AP Intermediate 2nd year Economics, part of the economic-statistics / index-numbers theme, treated in line with the NCERT/CBSE curriculum.

Meaning. An index number is a specialised statistical measure designed to show the relative change in the level of a variable, or a group of related variables, over time, place or other characteristics. It compares the value of the variable in a given period (the current period) with its value in a selected standard period (the base period). The base-period value is conventionally taken as 100, and the index number expresses the current-period value as a percentage of the base value. For example, if the price index for the current year is 120 with the base year as 100, it means that prices on the average have risen by 20 percent compared with the base year. Index numbers are used to measure changes in prices (wholesale and consumer price indices), industri …

Index numbers are statistical measures expressing the relative change in a variable or group of variables over time compared with a base period set at 100. Types include price, quantity and value index numbers, and they are used to measure changes in prices, the cost of living and production. This is an AP Intermediate 2nd-year Economics (statistics) topic.

Meaning: An index number is a statistical measure that shows the relative change in the value of a variable, or a group of related variables, between two different times, places or situations. The period with which the comparison is made is called the base period, and its value is taken as 100; the value of any other period is expressed as a percentage of this base.

Types of index numbers:

1. Price index numbers — measure changes in the level of prices over time, for example the wholesale price index or the consumer price index (cost-of-living index).
2. Quantity (volume) index numbers — measure changes in the physical quantity of goods produced, consumed or sold, such as the index of industrial production.
3. Value index numbers — measure changes in the total value (price multiplied by quantity) of goods. …

Index numbers are statistical measures that express the relative change in a variable or group of variables over time, compared with a base period taken as 100. They are used to measure changes in prices, production and the cost of living.

Index numbers are studied in the Economic Statistics topic of the AP Intermediate 2nd-year Economics course (aligned with the NCERT/CBSE commerce curriculum).

Meaning. An index number is a statistical device used to measure the change in the level of a variable, or a group of related variables, over time or between places, with reference to a selected base period. The value of the variable in the base period is taken as 100, and the value in the current period is expressed as a percentage of it. If a price index for the current year is 125, for example, it means prices have risen by 25 per cent compared with the base year.

Types. The main types are price index numbers, which measure changes in prices (such as the Wholesale Price Index and the Consumer Price Index); quantity index numbers, which measure changes in the volume of production or goods; and value index numbers, which measure changes in total value.

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