Question 17 of 35
Q.Explain the meaning of index number.
Maharashtra MsbshseMaharashtra HSC (MSBSHSE) Board 2022Subjective· 8mImportance★★★★★
49% · 17/35 Questions
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Start your 14-day free trial to unlock the full solution →An index number is a statistical measure showing the average percentage change in a group of related variables over time relative to a base year taken as 100.
Meaning:
An index number is a specialised statistical tool used to measure and compare the changes in the magnitude of a group of related variables — like prices, output or the cost of living — over a period of time or between two places. It expresses the change as a percentage of a chosen base period whose value is fixed at 100.
Explanation of the idea:
- The period taken as the standard of comparison is the base year and its index is always 100. The period whose change we want to study is the current year.
- If the current-year price index is 120, prices have risen 20 percent above the base year; if it is 90, prices have fallen 10 percent.
- Because it converts changes into a single percentage figure, an index number lets us compare things that are otherwise not directly comparable (e.g. changes in the general price level).
Important features:
- Expressed in Percentages — Index numbers are averages shown in percentage form, though the percentage sign is not written.
- Measure of Relative Change — They measure changes that cannot be directly measured, such as the general price level or the cost of living.
- Based on a Base Year — All comparison is made against a base period valued at 100. …
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