Skip to content

CA Foundation · Quantitative Aptitude · Index Numbers

Index numbers are often described as 'economic barometers'. What does this description mainly convey?

Index numbers are called economic barometers because they indicate the general direction and size of changes in economic variables, such as prices, output or wages, over time. They summarise relative movements of a group of items rather than exact values of each item.

  1. AThey give exact values of every individual item in a group
  2. BThey show the general direction and magnitude of changes in economic variables over timeCorrect
  3. CThey can be used only for price changes and never for quantities
  4. DThey remove the need to select a base year

Explanation

Index numbers act like barometers because they measure relative changes in a group of related variables, showing the general trend over time. They are not exact values for each item, they also apply to quantity and value, and a base period is always required.

Did you get it right without looking?

One question tells you little. A timed set on Index Numbers shows your real accuracy, how long you take and where you lose marks.

Practise Index NumbersFree diagnostic mock

More Index Numbers questions