Practice Index Numbers (11.2) - Index Numbers and Moving Averages

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6 sample questions

Question 1.
Define index numbers.
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Think about how changes compare to a base reference.
Question 2.
What is the purpose of the price index?
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Consider its role in assessing inflation.
3Question 3.
What does an index number compare economic data to?
- A different country
- A base period
- Current year data
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Think about the concept of relativity in index numbers.
4Question 4.
True or False: Quantity index numbers measure price level changes.
- True
- False
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Remember the definitions we discussed.
Question 5.
You have a set of data showing that the prices of five products have changed from base year prices to current year prices. Construct a price index number using the Simple Aggregate Method.
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Make sure to carefully collect your sums!
Question 6.
If the following products have the following weights and price changes: Product A (weight 2, price change 40%), Product B (weight 3, price change 10%). What is the overall index number?
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Think about how each weight affects the final number.

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