Question

State the main difference between Fixed base method and Chain base method.​

Answer 1

Answer:

The fixed base method is used by the government in the calculation of national index numbers. ... Another advantage of the chain base method is that it is possible to include new items in an index number or to delete old times which are no longer important. This is not possible with the fixed base method.

Answer 2

The main difference between the Fixed base method and the Chain base method is as follows:

• The fixed base method, the year is selected for construction of index numbers, it remains constant for all times and the base shall remain fixed.
• On the other hand chain base method changes every year mostly the preceding year and not the fixed year.
• In base year is such a year with which the changes in the current year are compared.
• The chain year can be old but the base year cannot be too old.