What are the steps involved in the construction of index numbers?
Understand the Problem
The question is about the steps and methods involved in constructing index numbers. It addresses the purpose, selection of items, base year, pricing quotations, and related factors necessary to create an accurate index number.
Answer
Determine purpose, select base year, items, prices, average, weights, and formula.
The steps involved are determining the purpose, selecting the base year, selecting items, choosing price quotations, selecting an average, assigning weights, and selecting a formula.
Answer for screen readers
The steps involved are determining the purpose, selecting the base year, selecting items, choosing price quotations, selecting an average, assigning weights, and selecting a formula.
More Information
Constructing an index number requires careful consideration of various factors to ensure it accurately reflects changes in economic variables such as prices. The base year should be normal, without significant economic disruptions.
Tips
Ensure accurate selection of the base year and reliable price data to avoid skewed results.
Sources
- Considerations for Constructing Index Number - unacademy.com
- Methods of Construction of Index Number | Economics - yourarticlelibrary.com
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