What are the steps in the construction of index numbers?
Answers
Selection of Base Year: The first step or the problem in preparing the index numbers is the selection of the base year. ...
Selection of Commodities: ...
Collection of Prices: ...
Selection of Average: ...
Selection of Weights: ...
Purpose of Index Numbers:
The steps in the construction of index numbers are:
1. Objective of the Index Number: First step is to decide the purpose for which index numbers are being calculated.
2. Commodities Selection: Different commodities are being selected on which index number will be applied.
3. Selection of Prices: Decision is being made whether to go in for wholesale price or retail price.
4. Selection of an Average: Selection is made between geometric and arithmetic mean in order to calculate the index numbers.
5. Selection of Weights: Under this step, due importance is being given to the commodities in the form of weights.
6. Selection of the Base Period: It is the most important step in which time period is being selected to compare with others. Base period should be normal as far as possible.
7. Formula Selection: There are many formulas to calculate the index numbers and the most appropriate is being selected as per the purpose.
Learn more about Index Numbers:
Question: Define the Index number.
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Question: What do you mean by Index number. ? How many types of index numbers are there ?
Answer: https://brainly.in/question/9208469