Question

What is the main purpose of index number? ​

Answer 1

Answer:

The primary purposes of an index number are to provide a value useful for comparing magnitudes of aggregates of related variables to each other, and to measure the changes in these magnitudes over time. Consequently, many different index numbers have been developed for special use.

Answer 2

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The primary purposes of an index number are to provide a value useful for comparing magnitudes of aggregates of related variables to each other, and to measure the changes in these magnitudes over time. Consequently, many different index numbers have been developed for special use. There are a number of particularly well-known ones, some of which are announced on public media every day. Government agencies often report time series data in the form of index numbers. For example, the consumer price index is an important economic indicator. Therefore, it is useful to understand how index numbers are constructed and how to interpret them. These index numbers are developed usually starting with base 100 that indicates a change in magnitude relative to its value at a specified point in time.

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$\sf \underline{Importance \: of \: Index \: Number}$

Index numbers occupy an important place due to its efficacy in measuring the extent of economic changes across a stipulated period. It helps to study such changes' effects due to factors that cannot be directly measured.

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