What is Index Number?

What is Index Number?

We are a part of a fast-paced economy. Numerous changes in the size of the population, output, money supply, income, and price of commodities are taking place continuously in an ever-changing environment. Economic changes have their effects on the volume of economic activity, income and employment, general price level, and other factors. Most people are interested in learning how much their values have changed over time and how they have changed, and most values evolve. The index number helps in studying changes in consumption, production, imports, exports, cost of living, crimes, accidents, national income, business failures, and other phenomena....

Example of Index Number

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Meaning and Historical Background of Index Numbers

An illustration can help explain the concept of index numbers. Take a look at how prices are expected to rise in 2019. In this situation, there are three basic questions....

Characteristics of Index Numbers

The index number was first constructed by an Indian Statistician, Carli in 1764. It was used for the first time to compare the prices of the year 1750 with that of the year 1500. An index number is a statistical tool for measuring changes in the magnitude of a group of related variables....

Uses of Index Numbers

The various features of Index Numbers are as follows:...

Limitations of Index numbers

Practically, in all areas of economic activity, changes are measured using index numbers. It helps in recording changes in output, income, employment, business activities, productivity, etc....