Summary
 An index number is a statistical device designed to compare a group of related variables over a period of time or space
 Generally index numbers are of three types
 Price index numbers
 Quantity index numbers
 Value index numbers
 Simple or unweighted index numbers
 Simple average of relatives method
 Weighted aggregative index
 Laspeyreâ€™s index number:
 Paascheâ€™s index number:
 Marshallâ€“Edgeworth index number:
 Fisherâ€™s ideal index number:
 Weighted aggregative of relative method
 When we want to measure and compare quantities, we resort to quantity index numbers
 Simple average of quantity relatives is expressed as
 Weighted aggregate quantity indices
 Laspeyresâ€™ quantity index number:
 Paascheâ€™s index number:
 Marshallâ€“Edgeworth index number:
 Fisherâ€™s ideal index number:
 A value index equals the total sum of values of given year divided by the sum of values of base year
 Consumer price index number is an index number of the cost met by a specified class of consumer in buying goods and services needed in daytoday life of the specified class of consumers.
 Aggregative expenditure method

Family budget method
 Shifting of base period or reference period of the index is known as base shifting.
 The process of combining two or more index numbers covering different bases into a single series is called splicing.
 Deflating is a technique used to make allowances for the effect of changing price values. It is used to measure the purchasing power of money.
 There are four tests to check for the adequacy of index numbers. They are
 Time reversal test
 Factor reversal test
 Unit test
 Circular test