■ INDEX NUMBER – CLASS 11 (Colourful Notes)
■ 1. Meaning of Index Number
• Measures change in price/quantity over time
• Base year is taken as 100
• Helps in percentage and relative comparison
■ 2. Features
1 Percentage change
2 Quantitative expression
3 Average change
4 Comparison with base year
■ 3. Problems in Construction
1 Purpose of index
2 Selection of base year
3 Selection of goods
4 Selection of prices
5 Selection of formula
■ 4. Types of Index Numbers
• Simple Index → Equal weight
• Weighted Index → Different weights
■ 5. Methods
Simple Aggregative Method: (ΣP1 / ΣP0) × 100
Price Relative: (P1 / P0) × 100
■ 6. Important Methods
Laspeyres: (ΣP1Q0 / ΣP0Q0) × 100
Paasche: (ΣP1Q1 / ΣP0Q1) × 100
Fisher: √(Laspeyres × Paasche)
■ 7. CPI (Consumer Price Index)
Measures cost of living of consumers
■ 8. WPI (Wholesale Price Index)
Measures wholesale price changes and inflation
■ 9. Importance
1 Government policy
■ 1. Meaning of Index Number
• Measures change in price/quantity over time
• Base year is taken as 100
• Helps in percentage and relative comparison
■ 2. Features
1 Percentage change
2 Quantitative expression
3 Average change
4 Comparison with base year
■ 3. Problems in Construction
1 Purpose of index
2 Selection of base year
3 Selection of goods
4 Selection of prices
5 Selection of formula
■ 4. Types of Index Numbers
• Simple Index → Equal weight
• Weighted Index → Different weights
■ 5. Methods
Simple Aggregative Method: (ΣP1 / ΣP0) × 100
Price Relative: (P1 / P0) × 100
■ 6. Important Methods
Laspeyres: (ΣP1Q0 / ΣP0Q0) × 100
Paasche: (ΣP1Q1 / ΣP0Q1) × 100
Fisher: √(Laspeyres × Paasche)
■ 7. CPI (Consumer Price Index)
Measures cost of living of consumers
■ 8. WPI (Wholesale Price Index)
Measures wholesale price changes and inflation
■ 9. Importance
1 Government policy
