Index Numbers

Question 1

What do index numbers compare?

Answer 1

Index numbers compare a current year’s data to a ‘base year’

Question 2

How to calculate simple index numbers

Answer 2

(current year’s raw data/base year’s raw data) x 100

Question 3

How to calculate index numbers without the base year data

Answer 3

(current year’s raw data/base year’s raw data) x previous years index value

Question 4

What are index numbers

Answer 4

• A statistical technique
• Allow economists to interpret data with large numbers
• So can make comparisons more easily

Question 5

What is a weighted index?

Answer 5

An ‘average’ index made up of a combination of other indices which are:
- HDI (Human development index)
- CPI (Consumer Price Index)

Question 6

How to calculate the weighted price index

Answer 6

Multiply the weight by the price index
Add these figures together
Divide by 1000

Question 7

How to inflation from weighted price index (if not comparing with the base year)

Answer 7

new index number/original index number

Question 8

How to calculate actucal figure

Answer 8

Actual figure = figure in base time period (index number/100)

Question 9

How to calculate the real value

Answer 9

(nominal variable/new price index) x base price index