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An index is a statistical measure of change in a representative collection of individual data points used in Statistics, Economics, and Finance. In addition to firm performance, pricing, productivity, and employment, these numbers can also come from other sources.

The purpose of index numbers is to track the degree of economic change over time. These figures are expressed as a percentage of a single figure. In economic statistics, index numbers are crucial.

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What are Index Numbers: An Overview?

Index values are used to track changes in the influence of things that can't be directly quantified. "Index numbers are used to evaluate the changes in some quantity that we cannot witness directly," Bowley explained. Changes in business activity in a country, for example, are not capable of direct measurement, but it is feasible to investigate relative changes in business activity by examining variations in the values of some of the components that impact business activity and are capable of direct measurement.

In most statistical devices, index numbers are used to assess the aggregate variations in a set of linked variables. If a statistician or researcher wishes to compare today's consumer pricing levels to those of ten years ago, they aren't interested in comparing the costs of individual things, but rather in comparing average price levels. The average price of numerous goods in one year can be compared to the average price of the same amount of articles in several years using index numbers. Various 'official' statistics sources include index numbers for amounts like food, clothes, housing, and earnings. Types of Index Numbers assignment help online is a comprehensive guide to Index Numbers, which you can check out for more.

Types of Index Number

Simple Index Number: A simple index number is a number that measures the change in a single variable relative to a base. These kind of Index numbers are made up of simply one component.

Composite index number: A composite index number is a number that represents the average relative changes in a set of relative variables with a base. Changes in some distinct elements are combined to create a composite index number.

Numbers in the price index: The relative variations in prices of a commodity between two periods are measured by price index numbers. There are two types of prices: retail and wholesale. Understanding and interpreting changes in economic and business conditions throughout time is made easier with price index numbers.

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Quantity Index Numbers: These numbers are used to track changes in the physical quantity of products produced, consumed, or sold for a particular item or collection of things.

Methods for generating index numbers include: There are two ways to make an index number: Methods for calculating relative and aggregate prices.

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