From the following data, prove that Fisher Ideal Index satisfies both the time reversal and the factor reversal tests:
Item 2018 2019
Price Quantity Price Quantity A 6 50 10 60
B 2 100 2 120
C 4 60 6 60
Answers
Step-by-step explanation:
constructing index numbers and the problem is that of selecting the most appropriate one in a given situation. The different tests are the unit test, time reversal test, factor reversal test, and circular test.
Unit Test:
This test states that the formula for constructing an index number should be independent of the units in which prices and quantities are expressed. All methods, except simple aggregative method, satisfy this test. Except for unweighted aggregative index number, all other indices satisfy this test.
Time Reversal Test:
This test guides whether the method works both ways in time forward and backward. According to Prof. Fisher, the formula for calculating an index number should be such that it gives the same ratio between one point of time and the other, no matter which of the two time is taken as the base. In other words, when the data for any two years are treated by the same method, but with the base reversed, the two index numbers should be reciprocals of each other.
Symbolically the test is represented as: P01 X P10 = 1
Answer:
with the help of following data prove that fishers ideal index_satisfies time reversal test
Step-by-step explanation:
विद द हेल्प ऑफ द फॉलोइंग