Question

Define index number. Discus the
uses and limitation of index number​

Answer 1

Answer:

The index numbers prepared for one purpose cannot be used for another purpose. For example, the cost-of-living index numbers of factory workers cannot be used to measure changes in the value of money of the middle income group

Answer 2

Definition

A number showing the variation in a price or value compared with the price or value at a specified earlier time

Limitations of Index Numbers:

There are no all-purpose index numbers. The index numbers prepared for one purpose cannot be used for another purpose. For example, the cost-of-living index numbers of factory workers cannot be used to measure changes in the value of money of the middle income group.

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