Question

Define/ Explain the concepts:−

Price index number

Answer 1

Price index number is used to calculate the changes in the prices of goods produced in a year with reference to the prices in the base year. In other words, these price indices are used to measure relative changes in the prices of goods over a time period.
There are three types of price indices. These are:

i. Wholesale price index
ii. Retail price index
iii. Cost of living index