Page 68 - VIRANSH COACHING CLASSES

a country are always changing and all 8) Limited scope : An index number has
these changes cannot be included in the limited scope because if it is constructed for
estimation of index numbers. one purpose then it cannot be used for any
6) Qualitative changes : The price or quantity other purpose.
index numbers may ignore the changes Find out :
in qualities of the products. At any given
time, a better quality commodity will have Newspaper headlines related to the
a higher production cost and a higher price following types of index numbers :
than an ordinary commodity which is a • Price Index
substitute for the better product. • Agricultural Productivity Index

7) Arbitrary weights : The weights assigned • Index of Industrial Production
to different commodities may be arbitrary. • Equity Share Price Index

EXERCISE

Q. 1. Choose the correct option : c) In most of the cases, quantities are used as
1) Statements that are incorrect in relation to index weights.
numbers. d) Laaspeyre's and Paasche's method is used in
a) Index number is a geographical tool. the calculation of weighted index numbers.
b) Index numbers measure changes in the air Options :1) b, c and d 2) a, c and d
pressure. 3) a, b and d 4) a, b, c and d
c) Index numbers measure relative changes in 4) Statements related to limitations of index
an economic variable. numbers.
d) Index numbers are specialized averages. a) Index numbers are not completely reliable.
Options :1) c and d 2) a and b b) There may be a bias in the data collected.
3) b and c 4) a and d c) Every formula has some kind of defect.
2) Statements that highlight the significance of d) Index numbers ignore changes in the
index numbers. qualities of products.
a) Index numbers are useful for making future Options :1) a, c and d 2) a, b, c and d
predictions. 3) a, b and d 4) b, c and d
b) Index numbers help in the measurement of 5) Choose the correct pair :
inflation. Group A Group B
c) Index numbers help to frame suitable 1) Price Index a) Σp q
1 1
policies. Σp q × 100
0 0
d) Index numbers can be misused. 2) Value Index b) Σq 1 × 100
Options :1) b, c and d 2) a, c and d Σq 0
3) a, b and d 4) a, b and c Σp q
1 1
3) Quantity Index c) Σp q × 100
3) Statements that apply to weighted index 0 1
numbers. 4) Paasche's Index d) Σp 1 × 100
a) Every commodity is given equal importance. Σp 0

b) It assigns suitable 'weights' to various Options :1) 1-d, 2-c, 3-a, 4-b 2) 1-d, 2-a, 3-b, 4-c
commodities. 3) 1-b, 2-c, 3-d, 4-a 4) 1-c, 2-d, 3-a, 4-b

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