Question

what is ideal index number​

Answer 1

Definition: Fisher's Ideal volume index is the geometric mean of the Laspeyres and Paasche volume indices. Context: A measure of change in volume from period to period. It is calculated as the geometric mean of a chain Paasche volume index and a chain Laspeyres volume index.

Answer 2

Answer:

• Fisher's Index Number is referred to as ideal since it uses both current and base year variables as weights without bias.
• It is founded on the geometric mean, which is the ideal average.
• It passes the factor reversal test as well as the time reversal test.

Explanation:

• A consumer price index (CPI) used to gauge the level of prices for products and services over a specific time period is the Fisher Price Index, also known as the Fisher's Ideal Price Index.
• The Laspeyres Price Index and the Paasche Price Index are geometric averaged to create the Fisher Price Index.
• Given that it corrects both the negative pricing bias in the Paasche Price Index and the positive price bias in the Laspeyres Price Index, it is known as the "perfect" price index.
• The Fisher Price Index is used to gauge an economy's price level and cost of living as well as to determine inflation, much like other consumer price indexes.
• By averaging the two weighted indices geometrically, the index corrects for the upward bias of the Laspeyres Price Index and the downward bias of the Paasche Price Index.

#SPJ2