Class 11 statistics Chapter 8 Index numbers
NCERT Notes for Class 11 statistics Chapter 8 Index numbers, (Statistics) exam are Students are taught thru NCERT books in some of state board and CBSE Schools. As the chapter involves an end, there is an exercise provided to assist students prepare for evaluation. Students need to clear up those exercises very well because the questions withinside the very last asked from those.
Sometimes, students get stuck withinside the exercises and are not able to clear up all of the questions. To assist students, solve all of the questions and maintain their studies without a doubt, we have provided step by step NCERT Notes for the students for all classes. These answers will similarly help students in scoring better marks with the assist of properly illustrated Notes as a way to similarly assist the students and answering the questions right.
NCERT Notes for Class 11 statistics Chapter 8 Index numbers
Class 11 statistics Chapter 8 Index numbers
WHAT IS AN INDEX NUMBER
- An index number is a statistical device for measuring changes in the magnitude of a group of related variables.
- It is a measure of the average change in a group of related variables over two different situations.
- An index number also measures changes in the value of the variables such as prices of specified list of commodities, volume of production in different sectors of an industry, production of various agricultural crops, cost of living etc.
- Price index numbers measure and permit comparison of the prices of certain goods. A price index represents changes by a single numerical measure.
- Production index is an important indicator of the level of the output in the economy.
CONSTRUCTION OF AN INDEX NUMBER
- There are two methods of constructing an index number. It can be computed by the aggregative method and by the method of averaging relatives.
- A weighted aggregative price index using base period quantities as weights is known as Laspeyre’s price index.
- A weighted aggregative price index using current period quantities as weights is known as Paasche’s price index.
SOME IMPORTANT INDEX NUMBERS
Consumer price index
- Consumer price index (CPI), also known as the cost of living index, measures the average change in retail prices.
- Government agencies in India prepare a large number of consumer price index numbers. Some of them are:
- Consumer Price Index Numbers for Industrial Workers.
- All-India Consumer Price Index Numbers for Agricultural Labourers.
- All-India Consumer Price Index Numbers for Rural Labourers.
- All-India Urban Consumer Price Index.
The Reserve Bank of India is using the All-India Combined Consumer Price Index as the main measure of how consumer prices are changing.
Wholesale Price Index
The Wholesale price index number indicates the change in the general price level.
Index of Industrial production
This is an index which tries to measure quantities of industrial production.
Human Development Index
The index widely used to know the development of a country is called Human Development Index (HDI).
- Sensex is the short form of Bombay Stock Exchange Sensitive Index with 1978–79 as base.
- It is the benchmark index for the Indian stock market.
- If the sensex rises, it indicates that the market is doing well and investors expect better earnings from companies.
- It also indicates a growing confidence of investors in the basic health of the economy.
ISSUES IN THE CONSTRUCTION OF AN INDEX NUMBER
The following are the important issues in the construction of an index number:-
- The purpose of the index.
- Selection of items included in the construction of index number.
- The nature and selection of proper base year.
- Choice of the formula, which depends on the nature of question to be studied. ( Laspeyre’s price index. or Paasche’s price index.)
- The reliability of the data sources.
INDEX NUMBER IN ECONOMICS
- Wholesale price index number (WPI), consumer price index number (CPI) and industrial production index (IIP) is widely used in economical policy making.
- Consumer index number (CPI) or cost of living index numbers are helpful in wage negotiation, formulation of income policy, price policy, rent control, taxation and general economic policy formulation. It is also used in calculating the purchasing power of money and real wage.
- The wholesale price index (WPI) is used to eliminate the effect of changes in prices on aggregates, such as national income, capital formation, etc.
- The WPI is widely used to measure the rate of inflation. Inflation is a general and continuing increase in prices. If inflation becomes sufficiently large.
- Index of industrial production helps to analyses change in production in the industrial sector.
- Agricultural Production Index provides information about the performance of agricultural sector.
- Sensex is a useful guide for investors in the stock market.