What is an index Number? What considerations are taken into account while selecting the base year for the preparation of an index number?
What is an index Number? What considerations are taken into account while selecting the base year for the preparation of an index number?
An index number is a statistical device for measuring the relative change in the prices of a group of related variables over two or more different times. In other words, an index number is defined as a specialised type of average which measures changes in the prices of commodities, industrial production, cost of living index etc.
Desirable Properties of the Base Period: The following are the basic properties for consideration while selecting the base period:
(i) The base period should be a normal period. It should be free of all sorts of abnormalities or irregular fluctuations. Abnormal periods like period of wars or floods etc.should not be as the base period.
(ii) The base period should neither be too short nor too long.
(iii) It should not be a year of the distant past. It should be a year of recent past.
(iv) It should not be the period for which actual data is not available.
An index number is a statistical device for measuring the relative change in the prices of a group of related variables over two or more different times. In other words, an index number is defined as a specialised type of average which measures changes in the prices of commodities, industrial production, cost of living index etc.
Desirable Properties of the Base Period: The following are the basic properties for consideration while selecting the base period:
(i) The base period should be a normal period. It should be free of all sorts of abnormalities or irregular fluctuations. Abnormal periods like period of wars or floods etc.should not be as the base period.
(ii) The base period should neither be too short nor too long.
(iii) It should not be a year of the distant past. It should be a year of recent past.
(iv) It should not be the period for which actual data is not available.
