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MCQ on Index Number WITH ANSWERS WITH BOLD

B.COM (SRM Institute of Science and Technology)

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Multiple Choice Questions on Index Number

1. Index number for base year is always considered as------

a. 100 b.101 c. 201 d. 1000
2. Index number is a special type of ----------
a. Average b. dispersion c. correlation d. None of the above
3. Index number is always expressed in ----------
a. Percentage b) ratio c. proportion d. None of the above
4. Index number is also called as-----------
a. Economic barometer b. Parameter c. Constant
d. None of the above

5. Which index number is called as ideal index numbr.

a. Lasperys b. Paasches c. Fisher d. None of the above

6. In Lasperys price index number weight is considered as---------

a. quantity in base year b. quantity during current year

c. prices in base year d. prices in current year.

7. In Paasches price index number weight is considered as---------

a. quantity in base year b. quantity in current year

c. prices in base year d. prices in current year.

8. Fishers price index number is the -------

a. A.M. of Lasperys and Paasches I.N.

b. G.M. of Lasperys and Paasches I.N.

c. Difference between Lasperys and Paasches I.N

d. None of the above.

9. A period for which index number is determined is called as ------

a. current period. b. base period c. Normal period. d. None of the above

10. The period of comparison or with respect to which index number is determined is called as---
---

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a. base period. b. current period c. Normal period d. None of the above

11. An index number is called a simple index when it is computed from:
a. Single variable b. Bi-variable c. Multiple variables d. None of them
12. If all the values are of equal importance, the index numbers are called:
a. Weighted b. Unweighted c. Composite d . Value index
13. Index numbers can be used for:
a. Forecasting b. Fixed prices c. Different prices d. Constant prices

14. When the prices of rice are to be compared, we compute:

a. Volume index b. Value index c. Price index d. Aggregative index

15. Price relatives are a percentage ratio of current year price and:

a. Base year quantity b. Previous year quantity c. Base year price d. Current year
quantity

16. An index number that can serve many purposes is called:

a. General purpose index b. Special purpose index c Cost of living index d. None of them

17. Another name of consumer's price index number is:

a. Whole-sale price index number b. Cost of living index c Sensitive d. Composite

18. Purchasing power of money can be accessed through:

a. Simple index b. Fisher’s index c. Consumer price index d. Volume index

19. Cost of living at two different cities can be compared with the help of:

a. Value index b. Consumer price index c. Volume index d. Un-weighted index

20. Consumer price index numbers are obtained by:

a. Laspeyre's formula b. Fisher ideal formula c. Marshall Edgeworth formula

d. Paasche's formula

21. Laspeyre's index = 110, Paasche's index = 108, then Fisher's Ideal index is equal to:

a. 110 b. 108 c. 100 d. 109

22. Most commonly used index number is:

a. Volume index number b. Value index number c. Price index number d. Simple index number

23. Consumer price index is obtained by:

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a. Paasche's formula b. Fisher's ideal formula c. Marshall Edgeworth formula

d. Family budget method formula

24. The aggregative expenditure method and family budget method always give:

a. Different results b. Approximate results c. same results d. None of them

25. If all the values are not of equal importance the index number is called:

a. Simple b. Unweighted c. Weighted d. None

26. Which of the following formula satisfy the time reversal test?

a. Lasperys b. Paasches c. Fishers d. None of the above.

27. When the price of a divided by the price of the preceding year, we, get:

a. Value index b. Link relative c. Simple relative d. None of them

28. The most appropriate average in averaging the price relatives is:

a. Median b. Harmonic mean c. Arithmetic mean d. Geometric mean

29. In constructing index number geometric mean relatives are:

a. Non-reversible b. Reciprocal c. Reversible d. None of them

30. The most suitable average in chain base method is:

a. Arithmetic mean b. Median c. Mode d. Geometric mean

31. Base year quantities weights are used in:

a. Laspeyre's method b. Paasche's method c. Fisher's ideal method d. None of the above

32. The Federal Bureau of Statistics prepares:

a. The wholesale price index b. The consumer price index

c. The sensitive price indicator d. All of the above

33. While computing a weighted index, the current period quantities are used in the:

a. Laspeyre's method· b. Paasche's method

c. Marshall Edgeworth method d. Fisher's ideal method

34. When the base year values are used as weights, the weighted average of relatives price index
number is the same as the:

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a. Laspeyre's index b. Paasche's index

c. Simple aggregative index d. Quantity index

35. Fisher's ideal index number is the geometric mean of the:

a. Laspeyre's and Marshall Edgeworth indices b. Laspeyre's and Paasche's indices

c. Paasche's and Marshal Edgeworth indices d. all of the above

36. The ratio of a sum of prices ill current period to the sum of prices ill the base period, expressed as a
percentage is called:

a. Simple price index number b. Simple aggregative price index number

c. Weighted aggregative price index number d. Quantity index number

37. Simple average of relatives is equal to:

∑ 𝟏 𝑷𝟏
a. ∗ 100 b. ∑ ∗ 100 c. ∑ ∗ 100 d. ∑ ∗ 𝟏𝟎𝟎
𝑵 𝑷𝟎

38. Paasche's price index number is also called:

(a) Base year weighted (b) Current year weighted

(c) Simple aggregative index (d) Consumer price index

39. Laspeyre's price index number is also called:

(a) Base year weighted (b) Current year weighted

(c) Cost of living index (d) Simple aggregative index

40. Index number calculated by Fisher's formula is ideal because it satisfy:

(a) Circular test (b) Factor reversal test

(c) Time reversal test (d) All of the above

41. Price Index Numbers measures the changes in?

a. relative changes in prices of commodities between two periods
b. Physical quantity of goods produced
c. single variable
d. None of the Above.

42. Paasche's Formula is the type of ______?

a. Weighted Aggregative Formula
b. Weighted Average Relative
c. Both A & B
d. None of the Above.

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43. Index Numbers may be categorized in terms of ___?

a. variables b. constants c. numbers d. All of the Above

44. Which of the following is useful to calculate Dearness allowances of employee?

a. correlation b. regression c Index Number d. None of the above

45. Which is the one of the problem in the construction of index number?

a. purpose of index number b. big formula

c. tedious job d. None of the above

46. If price index of base year with respect to current year is 125 then what it means?

a. 125% of prices increased in current year as compared to base year

b. 25% of prices increased in current year as compared to base year

c. 100% of prices increased in current year as compared to base year

d. None of the above

47. Which is the best suitable measure of central tendency to construct index number?

a. A.M. b. G.M c. H.M d. Median

48. Which one of the following is not the problems in the construction Index Number

a. selection of base period b. purpose of Index Number

c. Selection of weight d. Selection of proper scale

49. Base period always -----

a. Normal period b Abnormality should be present in the base period

c. base period should be far ago d. None of the above

50 Which of the following is used to denote prices in the base period

a. 0 b. 1 c. 10 d. 01

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