Choose the correct option

1) Statements that are incorrect in relation to index numbers.
a) Index number is a geographical tool.
b) Index numbers measure changes in the air pressure.
c) Index numbers measure relative changes in an economic variable.
d) Index numbers are specialized averages.
Options :
1) c and d
2) a and b
3) b and c
4) a and d
Ans:- 1) c and d

2) Statements that highlight the significance of index numbers.
a) Index numbers are useful for making future predictions.
b) Index numbers help in the measurement of inflation.
c) Index numbers help to frame suitable policies.
d) Index numbers can be misused.
Options :
1) b, c and d
2) a, c and d
3) a, b and d
4) a, b and c
Ans:- a,b and d

3) Statements that apply to weighted index numbers.
a) Every commodity is given equal importance.
b) It assigns suitable ‘weights’ to various commodities.
c) In most of the cases, quantities are used as weights.
d) Laaspeyre’s and Paasche’s method is used in the calculation of weighted index numbers.
Options :
1) b, c and d
2) a, c and d
3) a, b and d
4) a, b, c and d
Ans:- 1) b, c and d

4) Statements related to limitations of index numbers.
a) Index numbers are not completely reliable.
b) There may be a bias in the data collected.
c) Every formula has some kind of defect.
d) Index numbers ignore changes in the qualities of products.
Options :
1) a, c and d
2) a, b, c and d
3) a, b and d
4) b, c and d
Ans:- 2) a, b, c and d

5) Choose the correct pair:

Group A

Group B

1) Price Index

a) ∑p1q1/∑p0q0×100

2) Value Index

b) ∑q1/∑q0×100

3) Quantity Index

c) ∑p1q1/∑p0q1×100

4) Paasche’s Index

d) ∑p1/∑p0×100

1) 1-d, 2-c, 3-a, 4-b
2) 1-d, 2-a, 3-b, 4-c
3) 1-b, 2-c, 3-d, 4-a
4) 1-c, 2-d, 3-a, 4-b
2) 1-d, 2-a, 3-b, 4-c