INDEX NUMBER

1. The price of a litre of milk in 2006 was Rs 60 per litre and the price of milk in 2016 was Rs 80
per litre. Compare the two prices to create an index number.
(a) 1.33 (b) 0.75 (c) 75.00 (d) 133.33
2. Paasche price index is based on:
(a) base year quantities (b) current year quantities
(c) current year prices (d) average of base year and current year prices
3. If p0 is base year price and p1 is current year price, then the price relative is:
po qo p po
(a) (b)  (c)  (d) 
p p p p

4. If the price of a commodity increased 1.25 times in comparison to the base year, then the price
index is now:
(a) 25 (b) 50 (c) 100 (d) 125
5. If the price of a commodity have decreased by 35% over the base year prices, then the current
price index of the item will be :
(a) 35 (b) 65 (c) 135 (d) 165
6. If consumer price index decreased from 125 six years ago to 100 for the current year, then we can
say that the consumer prices:
(a) decreased by 80% during the six year period;
(b) decreased by 20% during the six year period;
(c) decreased by 25% during the six year period;
(d) decreased by 75% during the six year period.
7. For the data given below:

Base year Current year

Commodity Price Quantity Price Quantity
A y 10 2 5
B y 5 x 2

If the ratio between the Laspeyre index and Paasche index is 28:27, then the value of x is:
(a) 2 (b) 4 (c) 6 (d) 8
8. The unit price of brand Q in June 2015 and June 2016 was as follows:
Year 2015 2016
Unit price Rs 1.40 Rs 1.75
The price relative for this brand in June 2016, with base June 2015  100 is:
(a) 80 (b) 120 (c) 125 (d) 135
9 Find, by simple aggregate method, the index number of the following data:

Commodity Base Price Current Price

Rice 140 180
Oil 400 550
Sugar 100 250
Wheat 125 150
Fish 200 300

(a) 67.48 (b) 148.1 (c) 167.48 (d) 185.2

10. Find the index number for Q9 by applying the simple average of price relative.
(a) 95.2 (b) 110.5 (c) 133.33 (d) 157.21
11. If qo is base year quantity and qn is current year quantity, then the quantity relative is:
qo qn
(a) (b)
qn qo

qo qn
(c)  (d) 
qn qo

12. The following table of index numbers shows how the production of a particular model
of motorboat at a boat builders has changed over the period July 2016 to January 2017,
with January 2016 = 100;

July Aug Sep Oct Nov Dec Jan

Production index 110 119 115 106 102 98 95

If the actual production figure for July was 140 motorboats, then the number of motorboats
produced in January 2017 was closest to:
(a) 133 (b) 105 (c) 121 (d) 95
13. Mr. Kashif has been keeping records on the cost of car repairs. Some of the information appears
below:
2013 2016
Expenses Price ($) Quantity Price($) Quantity
Oil change 25 4 30 5
Windshield change 1.99 6 2.29 4
Car wash 4.99 12 6.49 11

Based on Paasche price index, what is the percentage increase in prices from 2013 to 2016?
(a) 18.65% (b) 22.73% (c) 66.65% (d) 75.65%
14. Hunain runs a pro shop at a local golf course. He was reviewing past and present invoices and
recorded the following information on golf supplies:

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 Price ($) Quantity
Items 2013 2016 2013 2016
Golf balls 1.95 2.95 2000 300
Shoes 95.00 150.00 75 50
Golf gloves 15.00 20.00 10 150

Based on Laspeyeres composite price index, by what percentage have the prices increased since
2013?
(a) 47.33% (b) 50.1% (c) 52.4% (d) 55.2%
15. The office manager of an insurance brokerage is reviewing the cost of maintaining the office. She
has recorded the prices and usage of 4 types of office supplies from 2013 to 2016. Her records are
presented below:

2013 2016
Item Price ($) Quantity Price ($) Quantity
Tonner 12.00 52 13.00 60
Pens 1.99 322 2.19 299
Note pads 2.15 159 2.29 150
Staples per box 9.5 100 10.19 125

Calculate the Fisher’s ideal index number.

(a) 108.8 (b) 120.2 (c) 130.6 (d) 140.7
16-17.
For the following data:
Year 1 2 3 4 5 6
Index 100 115 120 125 130 145
16. The index number of year 1 based on year 4 is:
(a) 40 (b) 60 (c) 80 (d) 100
17. The percentage increase from year 5 to year 6 is:
(a) 10.34% (b) 11.54% (c) 15% (d) not possible
18. The following table shows the price of a certain commodity over the years 2013 to 2016:
Year 2013 2014 2015 2016
Price 2.70 3.11 3.42 3.83
If a chain-based index is used, the price index for 2015 will be closest to:
(a) 110 (b) 117 (c) 120 (d) 127

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19. Following are the chain base index numbers. If the fixed base method is used, then the index
number for 2012 will be:
Year 2011 2012 2013 2014 2015
Index 80 110 120 90 140

(a) 88 (b) 137.5 (c) 150 (d) 175

20. Following are the chain base index numbers. If the fixed base method is used, then the index
number for the year 4 will be:

Year 1 2 3 4 5
Index 90 120 130 110 150

(a) 108 (b) 112.82 (c) 122.22 (d) 154.44

21. The purchasing power of the rupee can be calculated as:

(a)  100 (b) (1 − CPI)  100

(c) (1  CPI)  100 (d) none

22. Besides measuring change in the prices of goods and services, the consumer price index has a
number of other applications such as:
(a) to determine real disposable personal income,
(b) to deflate sales or other data series,
(c) to find the purchasing power of the rupee,
(d) establish the cost of living index.
(e) all of the above.
23. Real income is computed by:
(a) dividing the income by the CPI and multiplying by 100.
(b) dividing the CPI by income and multiplying by 100.
(c) multiplying the income by the CPI.
(d) subtracting the CPI from the income.
24. The CPI last year was 82.3 and this year is 90.9. Based on this information, the inflation rate
between these years is:
(a) 10.4% (b) 8.6% (c) 90.9%
(d) 82.3% (b) 9.09%
25. In 2000, the CPI was 39 and in 2016 it was 172. A local phone call cost $0.10 in 2000. What is
the price of this phone call in 2016?
(a) $1.42 (b) $0.39 (c) $1.72 (d) $0.44 (e) $0.23

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26. The average starting salary for a graduate is Rs 29,500. If the CPI is 147.5, the real salary is:
(a) Rs 200 (b) Rs 20,000 (c) Rs 35,000
(d) Rs 43,513 (e) Rs 14,750
27. CPI goes up from 110 to 200 and the salary of a worker is also raised from Rs 325 to Rs 500. In
real terms he has not gain. To maintain his previous standard of living, he should get an
additional amount of:
(a) Rs 85 (b) Rs 90.91 (c) Rs 98.25 (d) Rs 175
28. Net monthly income of an employee was Rs 3000 in 2015 and Rs 5000 in 2016. CPI in
2015 was 150. Find the CPI for 2016, given that net income of the employee is linked
to CPI (so that his standard of living remains same).
(a) 100 (b) 150 (c) 200 (d) 250
29. The Laspeyres and Paasche index are examples of:
(a) weighted price index only (b) aggregate index numbers
(c) weighted quantity index only (d) weighted index numbers
30. A simple aggregate price index:
(a) compares absolute prices to absolute quantities
(b) ignores relative quantities
(c) compares relative quantities to relative quantities
(d) considers relative quantities
31. The ratio of a new price to the base year price is called:
(a) price decrease (b) price increase
(c) price absolute (d) price relative
32. For a Laspeyres price index,
(a) the current year quantities are fixed
(b) the base year quantities are fixed
(c) the base year prices are fixed
(d) the current year prices are fixed
∑( )
33. The formula  100 , is used to calculate:
∑( )

(a) the Laspeyres price index (b) the Paasche price index
(c) the Paasche quantity index (d) the Laspeyres quantity index

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34. For the following data, determine the weighted quantity index for 2016 using 2015 as the base
year.
2015 2016
Items Price (Rs) Quantity Price (Rs) Quantity
P 2.50 2000 2.00 3000
Q 1.00 100,000 1.50 1,10,000
R 10.00 10,000 12.00 10,000

(a) 94 (b) 103 (c) 106 (d) 108

35. Laspeyres index formula uses the weights of the:
(a) base period (b) current year
(c) average of the weights of a number of years (d) none of the above.
36. The weights used in Paasche’s formula belong to:
(a) the base period (b) the given period
(c) to any arbitrary chosen period (d) none of the above
37. An index of 239.2 and an index of 86.4 are actually percents. [□True , □False ]
38. An index number is a percent that measures the change from one period of time to another in
terms of:
(a) value (b) price (c) quantity (d) alll of the above
39. The CPI for "personal computers and peripheral equipment" in June 2016 was 10.7 (1982-
1984 = 100). Interpret this index.
(a) there was no significant increase in the price of "personal computers and peripheral
equipment"
(b) the price of "personal computers and peripheral equipment" increased 10.7%
(c) the price of "personal computers and peripheral equipment" decreased 89.3%
(d) If the average price of a computer in 1982-1984 was $3000, the CPI for "personal
computers and peripheral equipment" would predict that the price of a computer in June
2006 would be $893.

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40. An electronic company produces and sells 4 models of a small digital camera. The selling prices
and total sales revenues for each model for 2013 through 2015 are as follows:

2013 2014 2015

Price Revenue Price Revenue Revenue
Model Price ($)
($) ($’000) ($) ($’000) ($’000s)
A 200 2000 190 2090 180 1440
B 250 750 240 480 240 600
C 300 1200 270 1350 280 1120
D 500 250 550 450 450 270
Required:
(a) Laspeyre’s price index for 2014 and 2015 with 2013  100 [94.64 , 92.02]
(b) Paasche’s quantity index for 2014 and 2015 with 2013  100 [102.77 , 88.75]
Exam Paper
36. Following are the prices and quantities of four products:
2015 2016
Commodities price (Rs) quantities price (Rs) quantities
A 400 200 425 250
B 225 150 240 215
C 250 146 300 225
D 120 250 150 400

Required:
Using 2015 as base year, find the weighted aggregative index numbers of 2016 by applying the
following:
(a) Laspeyer’s method; (112.23)
(b) Paasche’s method; (112.95)
(c) Fisher’s ideal method; (112.58)
(d) Marshal-Edgeworth’s method. (112.65)

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