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An index number becomes helpful to evaluate variations in one variable or some groups of variables regarding geographical times, location, and various other features. Commonly, an index’s base value is 100 and it symbolizes either to date, price, or level of production.

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What is an Index Number?

An index number is acknowledged as the measure of alterations that happen in a variable and at times a group of variables. This is commonly utilized in economics for measuring trends in many varieties of areas that comprise the cost of living, prices of the stock market, agricultural or industrial production, and imports. So, it can be said that an index number is one of the highly utilized statistical tools in economics.

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Characteristics of Index Numbers

We come across various types of index numbers. Presently, the highly relatable is considered price index numbers. They indicate the alterations that happen in the general price level for a specific time. However, you must note that the value of money continues to change and it doesn’t remain constant. But even when it rises or falls, it continues to change and influence the level of price.

An escalation in the level of price determines a failure in the cost of money. Again, the deterioration in the level of price is meant an augmentation in the price of money. So, the differences that happen in the cost of money get specified by the differences that happen in the general price level.

Hence, the alterations in the common prices can get assessed by a particular statistical device, called Index Number. Students always come to us for getting Index Numbers assignment help because we always propose unique and 100% plagiarism-free papers to our students.

Benefits of Index Numbers

There are many benefits of index numbers and they are:

  • Index numbers help in expressing policies – The majority of the business and economic policies and decisions get guided by an index number. For instance, for making any policy connected to agricultural or industrial production.
  • Index numbers help in studying trends – When you use index numbers, you will be able to study the trends in variables, such as agricultural and industrial production, export and import, share costs, etc.
  • Help in forecasting – Index numbers help in the study of present and past behavior besides forecasting business and economic activities.
  • Index numbers facilitate comparative study – For making comparisons according to place and time, index numbers are used. You can use index numbers for finding alterations in industrial production with alterations in agricultural production.
  • Index numbers are also useful for the measurement of buying strength of money for maintaining a specific standard of living – Some index numbers, like the cost inflation index helps measure the buying strength of money at various times. This analysis is helpful to the government for framing ideal policies to maintain or raise people’s standard of living.

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