Index Number Resolution For Free

One such very important tool are index numbers. They help reveal the trends and tendencies of the economy and also help in the formulation of economic policies and laws. There are broadly three types of index numbers ? price index numbers, value index numbers, and quantity index numbers.

Index numbers are values expressed as a percentage of a single base figure. For example, if annual production of a particular chemical rose by 35%, output in the second year was 135% of that in the first year. In index terms, output in the two years was 100 and 135 respectively.

The market value for each stock is calculated by multiplying its price by the number of shares included in the index, and each stock's weight in the index is determined based on its market value relevant to the total market value of the index.

Index numbers are used to show relative values ? a change in a variable relative to a base point in time. Index data uses a base (usually 100). Index numbers have no units. If you wanted to calculate the percentage change from the base you would just subtract 100, e.g. Year 1 = 100, Year 3 = 110.

An index number is a method of evaluating variations in a variable or group of variables in regards to geographical location, time, and other features. The base value of the index number is usually 100, which indicates price, date, level of production, and more. There are various kinds of index numbers.

It is also known as Simple Index Number and can be constructed with the help of two techniques; viz., Simple Aggregative Method and Simple Average of Price Relatives Method.

In constructing an index number, the following steps should be noted: Purpose of the Index Number: Selection of Commodities: Selection of Prices: Selection of an Average: Selection of Weights: Selection of the Base Period: Selection of Formula: