Index number definition and use.
Understand the Problem
The question is requesting the definition of an Index number, its general use and application.
Answer
An index number measures the change in a variable or group of variables over time, relative to a base value of 100. It simplifies complex comparisons.
An index number measures the change in a variable or group of variables over time, compared to a base period, typically set to 100. It simplifies the comparison of complex data, especially in economics, finance and business.
Answer for screen readers
An index number measures the change in a variable or group of variables over time, compared to a base period, typically set to 100. It simplifies the comparison of complex data, especially in economics, finance and business.
More Information
Index numbers are used in economics to represent movements in a wide variety of data, such as stock market indices, cost of living indices and producer price indices.
Tips
A common mistake is thinking index numbers provide absolute values rather than relative changes.
Sources
- Index number Definition & Meaning - Merriam-Webster - merriam-webster.com
- Index Number | Definition, Types & Formula - Lesson - Study.com - study.com
- What is the role of an index number in economics? - Investopedia - investopedia.com
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