Introduction to Index Number Test - 3

Price index =P1/P0*100. Here , current price level  is computed as a percentage of base year price level . So , the ratio P1/P2 is expressed as a percentage  by multiplying it by 100 .

Initially compiled in 1986, the Sensex is the oldest stock index in India. Sensex is the index showing changes in the Indian stock market

The Laspeyres price index is an index formula used in price statistics for measuring the price development of the basket of goods and services consumed in the base period. 

Time series analysis is a statistical technique that deals with time series data, or trend analysis.  Time series data means that data is in a series of  particular time periods or intervals.

The term weight refers to the relative importance of the different items in the construction of index numbers.

Index numbers are today one of the most widely used statistical devices. They, are used to feel the pulse of the economy and they have come to be used as indicators of inflationary or deflationary tendencies.

An index number is a specialised type of average. An average is a single figure representing a group of figures. Averages are used to compare two or more series as they represent their central tendencies. 

A consumer price index (CPI) measures changes in the price level of market basket of consumer goods and services purchased by all the households.

Statistics does not give any specific importance to the individual items; in fact it deals with an aggregate of objects

An Index number is a technique of  averaging all the changes in the group of series over a period of time. Index numbers is a special type of average which provides a measurement of relative changes from time to time or from place to place.