Class 11 Economics — Chapter 7: Index Numbers

What you'll learn

• ▸Definition and Purpose of Index Numbers
• ▸Types of Index Numbers
• ▸Methods of Constructing Index Numbers
• ▸Simple Aggregative Price Index
• ▸Concept of Weighted Index Numbers
• ▸Laspeyre's Price Index
• ▸Price Index using Current Period Weights (Paasche's Method)

Chapter Summary

--- PAGE 1 --- CHAPTER 7 11098CH08 Index Numbers CURRENT CHANGE OVER SENSEX PREVIOUS CLOSE 391109.5 OPEN 13-02-06 6602 Close/INR Last 6602.00 High 12/31/04 6602.00 Average 5564.17 Low 05/17/04 4605.15 शेयर बाजार की उड़ान 8952.56 6500 6000 5500 5000 4500 Jan04 Feb04 Mar04 Apr04 May04 Jun04 Jul04 Aug04 Sep04 Oct04 Nov04 Dec04 Studying this chapter should enable you to: • understand the meaning of the term index number; • become familiar with the use of some widely used index numbers; • calculate an index number; • appreciate its limitations. 1. INTRODUCTION You have learnt in the previous chapters how summary measures can be obtained from a mass of data. Now you will learn how to obtain summary measures of change in a group of related variables. Rabi goes to the market after a long gap. He finds that the prices of most commodities have changed. Some items have become costlier, while others have become cheaper. On his return from the market, he tells his father about…

Practice Questions from this Chapter

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1. Explain index number uses simply. Get Solution →
2. Show real-world inflation examples. Get Solution →
3. Define Sensex simply. Get Solution →
4. What is an index number defined as in the chapter? Get Solution →
5. In an index number calculation, what value is conventionally given to the base period? Get Solution →
6. What are the two main methods of constructing an index number mentioned in the text? Get Solution →
7. Which type of index number is used to measure changes in the physical volume of production? Get Solution →
8. What does P₀ represent in the formula for a simple aggregative price index? Get Solution →

Did you know?

• 💡 The first known price index was created in 1764 by an Italian economist to track price changes.
• 💡 The word "salary" comes from ancient Rome, where soldiers were paid in valuable salt.
• 💡 More than 3,600 companies are listed on the New York Stock Exchange, constantly changing their index value.
• 💡 The Big Mac Index uses hamburger prices worldwide to compare currency purchasing power.
• 💡 Ancient Egyptians used a "cubit," the length from elbow to fingertip, as a standard measurement.

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