792 ~(€)54—(b) 5 -(@) Ww, Answer t 1. What is a Ans: Index number is a statistical device for measuring r 2. State any i ‘ies 1 mark). tion carries he following questions in.a word /sentence (each ques! in index number? . i i iables. elative changes in related variabl One feature of index number. Ans: Index numbers are expressed in terms of percentage. 3. Define base year, Ans: The year with which the current year is o 4. What is price relative? ; waomecse Ans: Price relative is the price in the current year expressed as,a percentage of prices in ‘ompared to past year is called as base year.5, Where can we get some important index numbers such as CPL, WPL, HP etc. ‘Ans: We can get C.P.L, WPL IP 6. Define current year, mr etc, from economic survey. ‘urrent year a time period in which year the index number is calculated, +7, What Is inflation? Ans: Inflation refers to a general increase in prices and fall in the purchasing value of money. 8, Glve the formula to calculate the weekly inflation rate. Ans: Weekly inflation rate = += %r-t 199 9. Write the formula to calculating index of industrial production. UP, = 24 Ans: Uy = 22% 100 10. In which index number there is a relative importance of the items. Ans: Relative importance of the items is in weighted index. 11, Which Item having the highest weight in CPI for industrial worker? ‘Ans: General inflation having the highest weight in CPI for industrial worker. 12, What does wholesale prices index indicate? ‘Ans: The wholesale price index number indicates the change in the general price level. 13. What does consumer price index number reflect? Ans: Consumer price index number reflect the changes inthe retail price on the cost of living of consumers. 14, Mention the types of price index numbers. Ans: — (a) Consumer price index (CPI) (b) Wholesale price index (WPI) 15. What is the difference between unweighted and weighted index numbers? ‘Ans: In unweighted index number the relative importance of the items has not been taken but in weighted index number the relative importance of the items is considered. 16. What is SENSEX? ‘Ans: Sensex is an index which measures the share market trends of Bombay stock exchange. 17. Which index industrialists use in recent times instead of wholesale price index? ‘Ans; Industrialists use consumer price index instead of wholesale price index in recent times. V. Answer the following questions in about four sentences (each question carries 2 marks) 1. Write any four features of index numbers. ‘Ans: Features of index numbers are: (a) Index numbers are expressed in terms of percentage. (b) Index numbers measures the changes in the magnitude of a group of related variables. (©) Index number presents the changes on an average bases. (@) Index number are comparative in nature 2. What is price index number? Mention its types. ‘Ans: Price inidex is an average of price relatives for a given class of goods or services during a given interval time.‘Types of price index numbers are (a) Consumer price index (b) Wholesale price index 3. Why the simple a, Ans: The simple aggi commodities are not t 4. A ‘BBregative price index is of limited use? its of measure! regate price index is of limited use because the units o the same, Mention some important index numbers. + Some important index numbers are (a) Consumer price index (b) Wholesale price index (©) Industrial production index (@) Agricultural production index etc. S. What is consumer price index number? How do you calculate it? ‘Ans: Consumer price index [CPI] is a measure that examines the weighted average of prices of a basket consumer goods and services, Tris calculated by taking price changes for each item in the predetermined basket of goods and averaging them 6 What is wholesale price index? Write its drawbacks. Ans: Wholesale price index is the Price of a representative basket of wholesale goods drawbacks of wholesale price index are (a) It does not have any reference consumer category. (b) It does not include items pertaining to services: 7. What is industrial production index? Which year as the base for their index on India? Ans: Industrial production index an index which measures chan; many industries. In India 2004-04 is the base year for this index. 8. What does Agricultural production index indicate? How much weight is given to food in their index? Ans: Agricultural production index is a weighted average in this index. 9. What does indicate SENSEX? Is it a guide to investor? ‘Ans: SENSEX indicates the tends in prices of share and the wealth of share holders. Yes. SENSEX is a guide © investor to decide whether to invest or not. ges in the level of industrial production comprising of quantity relatives. Food grains have a weight of 50.7% 10. Name some index numbers. Where can we get these index numbers? Ans: Some of the widely used index numbers are WPI, CPI, Index of industrial e Production index of foreign tale | etc. These are available in economic survey.= 139-88 Vil. Answer the following in about twenty sentences (each question carries 6 marks) 1, Explain the uses of Index number. ‘Ans: Index number is a specialized average designed to measure the changes in a variabl2 with respect to time. The important features of index number are: . (a) Index number indicates percentage or ratio of changes in variables between two different period of time. (b) It measures relative changes in price quantity and value from one time to other. ; (©) This statistical device is used to measure the changes in the quantities. such as price wages. Cost sales production exports imports etc. (d) It measures a changes over a period of time referring to a base year whole value is equal to 100. (©) Index number compares economic variables of a particular group at two different periods. 2. Explain the difficulties in Construction of consumer price index number. ‘Ans: Refer VI2 answer. 3. Write a short note on CPI, WPI and IP. Ans: Some important index number constructed in India are: (@) CPI (Consumer price index): Consumer price index is a macro economic indicator which is designed to measure changes over a period of time, in the level of retail prices of selected goods and services. It helps toae eel ame WABES 10 the ef, estimate the real cost of living S0 it is also known as ‘cost of living index’ of inflation. es in the general whole step, (b) WPI (Whole sale price index): Whole sale price index indicate bapa in India. level of a representative ‘basket f goods’. It is most widely used inflation in 1 of commerce and industry 1k is compiled and published by office of the economic advisor department peae tees on measure changes in the lee (©) Industrial production index: (UP): The index number of industrial ee ublic and the private seco is weia, roduetion comprising many industries, It incadoe the production of (BP 1S a weighted average of quantity relatives. 4 Explain the uses of consumes price index numbers, re changes Over a petiod Ans: Consumer price index is a macro economic indicator which is designed to meast time, ‘The uses of consumer price index are conan vi @ To study the standard of living: CPI help to assess the living standard of people through cost of living ov, time. . Ss i ities. It is (©) To measure change in the price level: CPI measure of compare price of different commodities. It is useful know the final prices at the retail level. . (© Useful in planning and decision making: Itis useful forthe goverament and the planners to workout inflation rate with the help of consumer ‘Price index, (d) Reduce the affects of inflation: CPI measures the items with final prices at the retail level hence it is used tp adjust wages to the effects of inflation. (©) To help the government in framing policy: CPI helps the government to formulates policies regarding inflation trade, income, salaries and allowances. 5+ Calculate price index number by (a) Laspeyer’s method _(b) Paasche's method. Commodity ~~ ned Price | Quantity | Price | Quantity A 20 | 1s [30 | 20 Bl s [0 [20 | as c 30 | 2 | 25 | a0 D w | 5 | 2 ly Ans: Laspeyer’s method Commodity | Ps[ QP: [Q] Pade PiQe A___[20[15]30]20] 300 450 B fisfio[20fis| aso 200 c [30/20] 25/10] 600 500 D [io[s fifi] so 600 RQ =1100 | ERO, = 1219 ——|Joga = 1210 . = Trop *100=1-1«100=110 paasche’s method: Commodity |Po]Q[Pi [Qi] Peds PQ 2 20/15 | 30/20] 400 600 B 15 | 10 | 20 | 15 220 300 c 30 | 20 | 25 | 10 300 250 D 10| 5 | 12] 10 100 120 1270 =P, sent = 1270 109 =12390%100 = 123-90 1025 . VIll. Project oriented question (5 marks) 1. Record the daily expenditure, quantities bought and prices paid per unit, of the daily purchases, such as rice, toor dal, tomato, onion and milk of your family for two weeks. How has the price change affected your family. Ans: Commodity | Po | Qo| Pi | Q PoQo PQ Rice oo | s|os|4 300 325 Toordal | 130] 2 | 135] 2 260 + 270 Tomato 60 | 3 | 40] 4 180 120 ‘Onion 30 | 4 | 40 | 3 70 160 Milk 35 | 6 | 40 | 5 210 240 , | RQ) =1070 | ERO, =1115 7B 100 IRQ = 15 190 =1-042%100 = 104-20 1070 Price increased by 4.20%.