Question

Importance of index number

Answer 1

Answer:

Index numbers are important in economic statistics. In simple terms, an index (or index number) is a number displaying the level of a variable relative to its level (set equal to 100) in a given base period. Index numbers are intended to study the change in the effects of such factors which cannot be measured directly.

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Answer 2

Answer:

Index numbers are important in economic statistics. In simple terms, an index (or index number) is a number displaying the level of a variable relative to its level (set equal to 100) in a given base period. Index numbers are intended to study the change in the effects of such factors which cannot be measured directly.

Uses:

Index numbers of wholesale price of two countries are used to determine their rate of foreign exchange. They are the basis of the purchasing power parity theory which determines the exchange rate between two countries on inconvertible paper standard