Index Numbers(Business Statistics ) Questions and Answers

Question 1. Which of the following are the major characteristics of index numbers?
  1.    It is expressed in percentages
  2.    It measures the net or relative changes in variables
  3.    It measures changes over a period of time
  4.    All of the above
Explanation:-
Answer: Option D. -> All of the above


Question 2. The index number for base year is always ___________.
  1.    1000
  2.    200
  3.    100
  4.    None of the above
Explanation:-
Answer: Option C. -> 100


Question 3. The time period for which an index number is determined is known as ________.
  1.    Base period
  2.    Normal period
  3.    Current period
  4.    None of the above
Explanation:-
Answer: Option C. -> Current period


Question 4. Index number is a type of ____________.
  1.    Dispersion
  2.    Correlation
  3.    Average
  4.    None of the above
Explanation:-
Answer: Option C. -> Average


Question 5. Which of the following statements is/are correct about average prices if the price index is 110?
  1.    The prices have increased by 10 per cent
  2.    The prices have increased by 110 per cent
  3.    The prices have decreased by 10 per cent
  4.    None of the above
Explanation:-
Answer: Option A. -> The prices have increased by 10 per cent


Question 6. Which of the following are limitations of using index numbers?
  1.    The use of each index number is restricted to a specific object
  2.    It ignores the quality of commodities
  3.    It is useful only for short term comparison
  4.    All of the above
Explanation:-
Answer: Option D. -> All of the above


Question 7. Which of the following is the variation within two or more variable studies by the index?
  1.    Price index
  2.    Composite index
  3.    Simple index
  4.    None of the above
Explanation:-
Answer: Option B. -> Composite index


Question 8. The weights used in a quantity index are ________.
  1.    Quantity
  2.    Values
  3.    Price
  4.    None of the above
Explanation:-
Answer: Option C. -> Price


Question 9. Which of the following methods is used to calculate the Consumer Price Index?
  1.    Laspeyres’s formula
  2.    Fisher’s formula
  3.    Palgrave’s formula
  4.    None of the above
Explanation:-
Answer: Option A. -> Laspeyres’s formula


Question 10. An index number that can serve many purposes is known as a _______.
  1.    General purpose index
  2.    Special purpose index
  3.    Both a and b are incorrect
  4.    Both a and b are correct
Explanation:-
Answer: Option A. -> General purpose index


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