Index number

1. The year selected for comparison is called

a) Base year
b) Current year
c) Both a and b
d) None of the above
Answer : Base year
2. The year for which comparisons are required is called
a) Current year
b) Base year
c) Both a and b
d) None of the above
Answer : Current year
3. Price is the current year is expressed as the price in the percentage of the price in the
base year is termed as
a) Price relative
b) Quantity relative
c) Value relative
d) None of the above
Answer : Price relative
4. When the change in average level of a number of item is being studied collectively then
the index number is termed as
a) Simple index number
b) Price index number
c) Composite index number
d) Quantity index number
Answer : Composite index number
5. Price in the current year is expressed as percentage of the price in the base year is
known as
a) Price relative
b) Value relative
c) Quantity relative
d) None of the above
Answer : Price relative

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Ashwath Bhat

College Hoskote
 6. Study related to relative change in the total money value (Transaction) production is
known as
a) Price index number
b) Value index number
c) Quantity index number
d) Fixed base index number
Answer : Value index number
7. What is the value of an index number for the base year
a) 1
b) 100
c) 1000
d) 0
Answer : 100
8. If the period of comparison is kept fixed for all current years is called as
a) Fixed base period
b) Price index number
c) Chain base index number
d) None of the above
Answer : Fixed base period
9. If the relative changes in the level of phenomenon for any period are compared with
that of the immediate preceding period is called as
a) Retail price index number
b) Chain base index number
c) Fixed base index number
d) Wholesale price index number
Answer : Chain base index number

10. If price during the current year is triple the price during base year what is the value of
price relative
a) 200
b) 450
c) 800
d) 300
Answer :300

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Ashwath Bhat

College Hoskote
 11. If the price during current year is triple the price during base year what is the index
number
a) 500
b) 200
c) 300
d) 700
Answer :300
12. If the general price level goes up by 80% between 2002 and 2012 what is the index
number for 2012 with base 2002
a) 180
b) 590
c) 200
d) 80
Answer :180
13. The amount of commodity produced or consumed during a period is known as
a) Price weight
b) Quantity weight
c) Value weight
d) None of the above
Answer :Quantity weight
14. The common average used in construction of an index number is
a) Geometric mean
b) Arithmetic mean
c) Harmonic mean
d) All the above
Answer : Arithmetic mean
15. Which system of weights is used in the construction of Laspeyre’s price Index number
a) Base year quantity
b) Current year quantity
c) Base year price and current year price
d) Base year price and base year quantity
Answer : Base year quantity
16. Which system of weights used in the construction of Paasches price Index number
a) Base year price
b) Current year price
c) Base year quantity
d) Current year quantity

Answer : Current year price

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Ashwath Bhat

College Hoskote
 17. Which weight is used in the construction of Kelly's price Index number
a) Base year quantity
b) Current year quantity
c) Fixed quantity
d) None of the above
Answer : Fixed quantity
18. Which weight is used in the construction of Laspeyre’s quantity Index number
a) Current year quantity

b) Base year Price

c) Base year price and current year quantity
d) None of the above
Answer : Base year Price
19. Which weights are used in the construction of Paasche’s quantity index number
a) Base year price
b) Current year price
c) Base year quantity
d) Current year quantity
Answer : Current year price

20. Which system of weights used in the construction of Marshall Edgeworth’s Price index
number
a) Current year price & Base year quantity
b) Current year quantity & Base year price
c) Base year price & Current year price
d) Base year quantity & Current year quantity
Answer : Base year quantity & Current year quantity

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Ashwath Bhat

College Hoskote
 21. What is the relationship between Laspeyre’s and Paasche’s and fishers index number
(𝐹) (𝐿) (𝑃)
a) 𝑃01 =√[𝑃01 ∗ 𝑃01 ]

(𝑃) (𝐿) (𝐹)

b) 𝑃01 =√[𝑃01 ∗ 𝑃01 ]

(𝐹) (𝐿) (𝑃)

c) 𝑃01 =√[𝑃01 + 𝑃01 ]

(𝐹) (𝐿) (𝑃)

d) 𝑃01 =√[𝑃01 − 𝑃01 ]

(𝐹) (𝐿) (𝑃)

Answer : 𝑃01 =√[𝑃01 ∗ 𝑃01 ]

22. What is the relation between Laspeyre’s and Paasche’s , Dorbish_Bowley’s price index
number.
(𝐿) (𝑃)
𝑃01 +𝑃01 = (𝐷𝐵)
a) 𝑃01
2
𝐿) (𝑃)
𝑃(01 ∗𝑃01 (𝐷𝐵)
b) =𝑃01
2
(𝐿) (𝐷𝐵)
𝑃01 ∗𝑃01 (𝑃)
c) =𝑃01
2
d) None of the above
(𝐿) (𝑃)
𝑃01 +𝑃01 = (𝐷𝐵)
Answer : 𝑃01
2

23. Which of the following condition required to satisfies TRT

a) 𝑃01 ∗ 𝑃10 = 1
b) 𝑃01 + 𝑃10 = 1
c) 𝑃01 − 𝑃10 = 1
d) 𝑃01 ∗ 𝑃10 = 1
Answer : 𝑃01 ∗ 𝑃10 = 1

24. Which of the following conditions required to satisfies FRT

a) 𝑃01 ∗ 𝑄01 = 𝑉01
b) 𝑃01 + 𝑄10 = 𝑉01
c) 𝑃01 − 𝑄10 = 𝑉01
d) 𝑃01 ∗ 𝑄11 = 𝑉10
Answer : 𝑃01 ∗ 𝑄01 = 𝑉01

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Ashwath Bhat

College Hoskote
 25. Which of the following index number satisfies TRT
a) Fishers index number
b) Marshall Edgeworth’s index number
c) Both a and b
d) Neither a nor b
Answer : Both a and b.Both Marshall Edgeworth’s index number & Fishers index number
satisfies TRT
26. Which of the following index number does not satisfies circular test
a) Simple Geometric mean index number
b) Marshall Edgeworth’s index number
c) Kelly’s index number
d) Both a and b
Answer : Marshall Edgeworth’s index number
27. Circular test is said to be satisfied if
a) 𝑃01 ∗ 𝑃10 ∗ 𝑃21 = 1
b) 𝑃01 ∗ 𝑃12 ∗ 𝑃21 = 1
c) 𝑃01 ∗ 𝑃12 ∗ 𝑃20 = 1
d) None of the above
Answer : 𝑃01 ∗ 𝑃12 ∗ 𝑃20 = 1
33. Which of the following index number doesn’t satisfies TRT
a) Laspeyre’s Index number
b) Dorbish-Bowley’s Index number
c) Paasche’s Index number
d) All the above
Answer : All the above. Only Marshall Edgeworth’s and Fishers index number satisfies TRT.

34. Which of the following index number shows upward bias

a) Laspeyre’s index number
b) Paasche’s Index number
c) Kelly’s index number
d) None of the above
Answer : Laspeyre’s index number.

35. Which of the following index number shows downward bias

a) Kelly’s Index number
b) Marshall Edgeworth’s Index number
c) Fisher’s Index number
d) Paasche’s Index number
Answer : Paasche’s Index number

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Ashwath Bhat

College Hoskote
 36. Which of the following index number free from bias
a) Fishers Index number
b) Marshall Edgeworth’s Index number
c) Both a and b
d) None of the above
Answer : Both a and b. Both Fishers Index number & Marshall Edgeworth’s Index number

37. The price of the commodities is used in the construction of cost of living Index number
is
a) Retail Price
b) Consumer price
c) Both a and b
d) Neither a nor b
Answer : Retail Price
38. Which of the following method is used to compute consumer price index number
a) Aggregate expenditure method
b) Family budget method
c) Both a and b
d) Neither a and nor b
Answer : Both a and b. Both Aggregate expenditure method & Family budget method

39. Which of the following system of weights is used in the construction of consumer price
index by aggregative expenditure method
a) q0
b) q1
c) p0q0
d) p1q1
Answer : q0 (Base year quantity)

40. Which of the following index number doesn’t satisfies FRT

e) Laspeyre’s index number
f) Dorbish-Bowley’s Index number
g) Paasche’s Index number
h) All the above
Answer : All the above , Only Fisher’s Index number satisfies FRT.

7
Ashwath Bhat

College Hoskote
8
Ashwath Bhat

College Hoskote