MCQs Index Numbers 3

Multiple Choice Questions from Introductory Statistics for the preparation of exams and different tests. This page includes the Index Numbers test for the preparation of different statistics and job-related examinations. Lets us start with the index numbers quiz, which is the third test index numbers.

1. How many steps are involved in the construction of the index number of prices:

 Five

 Four

 Six

 Three

2. A base period can be described as a normal period if:

 It is neither the peak nor the trough of a fluctuation

 It must be the most recent period for which we have data

 There was no inflation or deflation of prices during the period

 Option (a) and (c)

3. Commodities subject to considerable price variations could best be measured by

 Price index

 Quantity index

 Value index

 Consumer price index

4. The consumer price index number is also known as

 The wholesale price index

 The weighted index

 The cost of living index

 Simple index

5. Depression in a business is?

 Cyclical

 Secular

 Seasonal

 Irregular

6. To measure changes in total monetary worth, one should compute:

 Price index

 Quantity index

 Value index

 Consumer price index

7. A primary difference between the average of relatives and aggregate methods is that

 Aggregate methods sum all prices before finding the ratio

 Average of relatives methods sum all prices before finding the ratio

 Aggregates methods are useful only for price indices

 Option (a) and (c) but not (b)

8. Which of the following describes the advantage of using the Laspeyer’s method?

 Many commonly used quantity measures are not tabulated for every period

 Changes in consumption patterns are taken into account

 One index can be easily compared

 Option (a) and (c) but not (b)

9. The circular test is satisfied for

 Fisher’s index

 Lespeyre’s index

 Paasche’s index

 None of these

10. If an index number calculations over 8 years with a base value of 100 gave an index for 2015 of 120, what would be the percentage relative for 2015?

 100

 120

 200

 12

11. The weights used in a quantity index are:

 Percentages of the total quantity

 Prices

 Average of quantities

 None of these

12. When the base year values are used as weights, the weighted average of the relative price index is the same as

 The Paasche’s index

 The Laspeyer’s index

 The unweighted average of the relative price index

 None of these

13. When computing a weighted average of the relative index, we would be best able to compare indices from various periods if:

 Base values were used as $p_nq_n$

 Current values were used as $p_nq_n$

 Fixed vlaues were used as $p_nq_n$

 Either base or fixed values were used as $p_nq_n$

14. Which of the following index has a downward bias?

 Paasche’s index

 Fisher’s index

 Lespeyre’s index

 Marshall-Edgeworth index

15. To measure how much the cost of some variable changes over time, we would use

 Inflation index

 Quantity index

 Value index

 None of these

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• Construction of Index Numbers which follows steps (i) Object of Index Number, (ii) Choice of items, (iii) Choice of Base Period, (iv) Collection of Prices of Items, (v) Choice of Average, (vi) Selection of Proper Weights
• Fixed Base Method
• Chain Base Method
• Composite Index Numbers
• Un-Weighted Index Numbers which includes (i) Simple Aggregative Index Numbers, (ii) Simple Average of Relatives Index Numbers
• Weighted Index Numbers which includes (i) Weighted Aggregative Index Numbers, (ii) Weighted Average of Relatives Index Numbers
• The Weighted Aggregative Index Numbers includes (i) Laspeyre’s Index Number, (ii) Paasche’s Index Number, (iii) Fisher Idea Index Number, Value Index Number,
• Consumer Price Index Numbers. The important steps in the construction of CPI numbers which includes (i) Choosing the class of people, (ii) Selection of commodities, (iii) Budget Inquiry, (iv) Collection of Prices, (v) Calculation of CPI Numbers