Chapter 8 - Index Numbers

Given the following data:

Record the daily expenditure, quantities bought and prices paid per unit of the daily purchases of your family for two weeks. How has the price change affected your family?

An enquiry into the budgets of the middle class families in a certain city gave the following information;

The consumer price index for June, 2005 was 125. The food index was 120 and that of other items 135. What is the percentage of the total weight given to food?

If the salary of a person in the base year is Rs 4,000 per annum and the current year salary is Rs 6,000, by how much should his salary rise to maintain the same standard of living if the CPI is 400?

Try to list the important items of consumption in your family.

Read the following table carefully and give your comments.

The monthly per capita expenditure incurred by workers for an industrial centre during 1980 and 2005 on the following items are given below. The weights of these items are 75, 10, 5, 6 and 4 respectively. Prepare a weighted index number for cost of living for 2005 with 1980 as the base.

Can the CPI number for urban non-manual employees represent the changes in the cost of living of the President of India?

Is the change in any price reflected in a price index number?

What is the difference between a price index and a quantity index?

What does a consumer price index for industrial workers measure?

Why is it essential to have different CPI for different categories of consumers?

What are the desirable properties of the base period?

Why do we need an index number?

In general, inflation is calculated by using

(i) wholesale price index

(ii) consumer price index

(iii) producers' price index

The item having the highest weight in consumer price index for industrial workers is

(i) Food

(ii) Housing

(iii) Clothing

A consumer price index measures changes in

(i) retail prices

(ii) wholesale prices

(iii) producers prices

The impact of change in the price of a commodity with little weight in the index will be

(i) small

(ii) large

(iii) uncertain

In most of the weighted index numbers the weight pertains to

(i) base year

(ii) current year

(iii) both base and current year

An index number which accounts for the relative importance of the items is known as

(i) weighted index

(ii) simple aggregative index

(iii) simple average of relatives