CA Foundation P3 · Chapter 18 · Question 5 of 9
Which index number satisfies both the time reversal test and the factor reversal test?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Fisher's ideal index
Explanation
Fisher's index, √(L x P), satisfies both the time reversal test (P₀₁ x P₁₀ = 1) and the factor reversal test (P₀₁ x Q₀₁ = V₀₁). Laspeyres' and Paasche's indices satisfy neither of these tests.
More Index Numbers MCQs
- Q7On an old base, the index numbers for years X and Y are 150 and 180. If the base is shifted to year X, the new index for year Y is:
- Q8A worker's money wage is ₹30,000 per month and the consumer price index (base = 100) is 150. His real wage in base-year prices is:
- Q9The price relatives of three items are 120, 150 and 110, with weights 5, 2 and 3 respectively. The weighted index of price relatives is:
- Q1The sum of base-year prices of a group of commodities is ₹250 and the sum of current-year prices is ₹300. The simple aggregative price…
- Q2Using the data below, Laspeyres' price index is (to two decimals): Item A: p₀ = 10, q₀ = 5, p₁ = 12, q₁ = 6 Item B: p₀ = 8, q₀ = 10, p₁ =…