In India Base Period For Construction Index Number

The number of wholesale prices is calculated on the basis of the wholesale prices for certain key raw materials

These raw materials in the index are raw materials and semi-finished products. The most important and price-sensitive.

semi-finished products bought and sold on the wholesale market are selected and weighted according to their relative importance.

Due to the dynamics of global consumption patterns, the individual number and variety of goods are subject to constant change.

A normal period means that it is free of all sorts of anomalies and accidental causes such as financial crises, floods, famines, earthquakes, strikes against workers, wars, etc.

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Solved Questions On Index Numbers

For each period, a fixed base average is chosen, as it is difficult to choose a single period as "normal," and a better choice is to take an average of several periods as a base.

The construction index number aims to define which items are directly related to the respective purpose and are included

Consumer behavior may change, rendering the index figure useless. The system requires a chain-based comparison from year to year, and this is used.

The second problem with the number of the construction index is the choice of raw materials. Commodities are not as representative as they were selected to keep track of the purpose and nature of the index number.

The base year is selected in two ways: a fixed base method, in which the base year remains fixed in the chain, or a base method

in which the base years go up and down and change from 1980 (the base year 1979) to 1979 to 1979 and then back to the base year 1978.

For demonstration purposes, let us create an index number to evaluate the fluctuations in tuition fees for the 2020-2021 school year compared to the base period 2006-2007

Tuition fees are \$4,400 for 2006-07 and \$6,610 for 2020-21 (Duffin 2020). A practical difficulty in creating an index number is the selection of the base period.

Determining the weights of raw materials according to their relative importance is a practical difficulty in constructing the index number.

In practice, when determining the significance of a commodity price for the overall price level (i.e. its price as quantity produced, consumed, or bought), we can use quantity weights to construct the weight of the aggregate price index

If the quantity in the base period deviates from the quantity for a certain period, as shown in Table 4, we have several options for selecting the quantity weight. First, we can determine whether commodity weights distort the index numbers.

The simplest way to calculate the total price index is to calculate an unweighted total index. The index is calculated by adding.

the unit prices in the interest period and dividing the resulting amount by the sum of the price units in the base period. The ratio of the two sums is multiplied by 100, as is usual in index number construction.

An index figure is also known as an economic barometer. The advantages of using index numbers are as follows

Helps formulate strategies Most economic and corporate decisions and strategies are guided by index numbers. The answer to the following problems when constructing index numbers is

Purpose of index numbers There are many different types of index numbers that can be constructed for different purposes. The correct and reliable source must be selected.

Weighted total quantity indices attempt to measure quantity changes, but they do not use quantity when using weights.

Similar to weighted total price indices, they use fixed-price weights for the quantity weighted by the associated price.

The weights used in the construction price and volume indices use the same index number method.

In this example, the expenditure in 1996 compared to 1982 on the basis of the unweighted 1990 price index is \$249, 123, 220, 14,500, 70,000, 130, 150, 8,000 and 30,000 (100% and 22.2%)

Based on the calculated figure of the Unweighted Price Index for 1996, the prices of normal motor vehicle operating costs increased by 12.2 percent between 1982 and 1996.

The Wholesale Price Index (WPI) is the price of a representative shopping basket. The United States notifies the producer price index.

Some countries, such as the Philippines, use the WPI to change the key measure of inflation. India recently introduced the new CPI to measure inflation.

We will calculate the basket values for 2006 and 2007. The price index is the ratio of the expenditure on a basket of goods.

At the current price to the expenditure on the basis of the price year. The figures refer to the year 2006 and the prices for 2007 are exp.

PI0 is the price of a single item in the basic period and pit is the price of individual items in the observation period.