index numbers

3. An index number measures the
relative change in price , quantity ,
value , or some other items of
interest from one time period to
another.
A simple index number measures
the relative change in one or more

4. “ Index numbers are quantitative measures
of growth of prices , productions ,
inventory and other quantities of
economic interest”

6. An index number makes possible the
measurement of such complex changes whose
direct measurement is not possible .

7. Index numbers give the knowledge as
to what changes have occurred in the past .
On the basis of these changes alone ,
predictions about the future are made .
Thus , index numbers are economic
barometers .

8. By index numbers , the relative changes
occurring in the variables are determined . This
simplifies comparison on the basis of time and
space .

9. By index numbers the
changes taking place in the
purchasing power of money can also
be measured .

10. Index numbers measures the changes taking
place in the business world and prove very
useful in making a comparative study of
those changes , eg. Sales , changes in
output and value , etc.
Thus , index numbers , for a
businessman , function like a barometer.

11. By index numbers the government and
other employees can properly make wage and
salary fixation . They determine the installment
of dearness allowance for employees on the basis
of index numbers only.

14.  To sum up , index numbers are sign and guide posts
along the business highway that indicate to the
businessman how he should drive or manage his
affairs.
 We can say that index numbers are economic
barometers to judge the inflation or deflationary
tendencies of the economy.
 They help the government in adjusting its policies in
case of inflationary situations .