Index Numbers
Definition
An index number can be defined as a single indicator representing the change in the value of a variable relative to its value at some base date or state referred to as the base period. The index is often conventionally scaled so that its base value is 100. The variables considered represent a number of concepts including prices, quantity, volumes, value of a commodity, or other general economic variable such as national income, or gross output, cost of living, value of stock exchange etc. It constitutes a convenient way to standardize the measurement of numbers so that they are directly comparable.
Index numbers are used in several instances. The most commonly used include price indexes, quantity indexes, value indexes, or special-purpose indexes etc. Some of the most widely known and used indexes include the Consumer Price Index (CPI), the Producer Price Index (PPI), the Human Development Index (HDI), etc. The CPI describes the change in prices of a basket of goods...
References and Further Reading
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