Question

Which of the following statements is correct in regards to index numbers?

* Index numbers are actually percentages because they are based on 1 or the number 100. However, the percent symbol is usually omitted.

* Each index has a base period.

* Each index has a base period.
(c) Monst business and economic indexes are computed to the nearest whole number, such as 214 or 96, or to the nearest tenth of a percent, such as 83.4 or 118.7.

* All of the answers are correct.

Answer 1

All of the statements are correct.

An index number is an economic data figure reflecting price or quantity compared with a standard or base value.The base usually equals 100 and the index number is usually expressed as 100 times the ratio to the base value. For example, if a commodity costs twice as much in 1970 as it did in 1960, its index number would be 200 relative to 1960. Index numbers are used especially to compare business activity, the cost of living, and employment. They enable economists to reduce unwieldy business data into easily understood terms.