INDEX NUMBER

Presented by:Parveen kaur Malvika singh

Meaning and Definition

Index number are special type of average that provide measurement of relative change time-time, place-place. DEFINITION: Index number are device for measuring difference in magnitude of group of related variable. Index number are used to measure over time magnitude which are not capable of direct measurement.

Features of index number

Specialized average Expressed in percentages IN are for comparison Changes can be measure with IN Change is possible in one variable or group of related variable

Methods of construction
Selection of data Base period Selection of weights Use of average Choice of variables Selection of formula

Problems in construction of IN
Defining the purpose Selecting the base year Selecting the items and their varieties Collection of data relating to price and quantities Assignment of weights Selection of suitable method of average Choice of the appropriate formula

Types of index number

Price index Quantity index Value index

Method of Index number

UNWEIGHTED

Aggregative

Relative

WEIGHTED

Aggregative

Relative

Aggregative

Laspeyres method

Paasches method

Fishers Ideal method

Dorbish Bowleys method

MarshallEdgeworth method

Kelleys method

Test of adequacy of IN
Time reversal test

Factor reversal test