Is the change in any price reflected in a price index number?

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Solution

No, the change in any price is not reflected in a price index number. In fact, only the relative change or the percentage change in the price level is reflected in the price index number. Index numbers of prices are not simply a statement of prices at different dates, but they present the estimates of relative changes in the prices over the years with reference to a particular base year.

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Similar questions

(I) The change in any price is reflected in an index number.

(II) The wholesale price index can be used to measure the monetary and real value of national income and expenditure.

A consumer price index measures changes in

(i) retail prices

(ii) wholesale prices

(iii) producers prices

Which of the following statement(s) is/are correctly stated?

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