Question

Define Index number. What are its main feature?

Answer 1

Index numbers are the variables that indicate the change in prices and quantities. It helps to measure the change in a group of variables which are inter-related, over a period of time.

Features of Index numbers are:

1.Average: they predict or represent the changes that take place in terms of averages.

2. Quantitative: they offer the accurate measurement of quantitative change.

3. Measures of relative changes: they measure relative changes over time.