Question

6.
State the condition required to satisfy circular test.​

Answer 1

Answer:

$\huge\mathrm{Answer}$

This test requires that the index numbers should be independent of the units in which price or quantities of various commodities are quoted. This test is satisfied by all index numbers except simple aggregative price index number.

Answer 2

Condition required to satisfy circular test:

• Test of the adequacy of the index number formula is known as the circular test.
• Circular test requires that the index numbers must be independent of the units in which price or quantities of various commodities are quoted.
• This test is satisfied by all index numbers. But simple aggregative price index number is an exception.
• Fisher's index number is not the condition required to satisfy circular test.
• In the use of index numbers interest attaches to the measurement of price changes over a period of years.
• In the use of index numbers interest attaches not only to a comparison of two years.

#SPJ2