CA Foundation · Quantitative Aptitude · Index Numbers
Which of the following is the most accurate description of an index number?
An index number is a statistical measure of the average relative change in a variable or group of related variables over time or place, compared with a base period. It expresses change in relative terms, not as absolute change, and is not limited to prices or quantity.
- AA statistical measure showing the average relative change in a variable or group of related variables over time or place, compared with a baseCorrect
- BA measure that records only the absolute change in the price of a single commodity
- CA device used exclusively for measuring changes in the quantity of production
- DA measure of dispersion of observations around the arithmetic mean
Explanation
Index numbers are often called economic barometers. They measure relative change in a variable or a group of related variables over time, place or another characteristic, against a base value. The other options describe absolute change, quantity alone, or dispersion, none of which defines an index number.
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