Index Numbers Flashcards
1
Q
Why are index numbers used?
A
Make number a lot simpler
Allow for quick and easy comparisons
2
Q
What is the base year index number?
A
100
3
Q
What is the formula for an index number?
A
Raw number (year asked)
————————————— x100
Base year number (100 next to it)
4
Q
What is the formula for percentage change?
A
Difference / original x 100
5
Q
What is a nominal value?
A
Today’s value of an item including tax
6
Q
What is the real value of an item?
A
The value of an item while taking out inflation
7
Q
What is CPI (consumer price index)?
A
A measure of the average change over time in the prices laid by consumers for a representative basked of consumer goods and services, accounting for inflation
