Question

Index numbers measures changes in the price level only. Agree or disagree with reasons.​

Answer 1

I disagree with the above statement.

Reason:

i. An index number is a device to measure changes in the economic variables (or groups of variables) over a period of time.

ii. Index numbers are one of the most used statistical tools in economics.

iii. Index numbers were originally developed to measure changes in the price level.

iv. At the present time, it is also used to measure trends in a wide variety of areas such as stock market prices, cost of living, industrial and agricultural production, changes in exports and imports, etc.