Online Test — Index Numbers
15 Questions • 15 min • Chapter MCQ
15:00
Question 1 of 15
An index number measures the average change in values relative to a:
Future year
Base year
Random year
Leap year
Explanation: Index numbers compare with a chosen base year.
Question 2 of 15
The value of the base year in an index number is:
0
1
100
10
Explanation: The base year value is taken as 100.
Question 3 of 15
A price index of 130 (base = 100) means prices rose on average by:
30%
130%
13%
70%
Explanation: 130 is 30 above 100, so a 30% rise.
Question 4 of 15
Index numbers are often called:
Economic barometers
Tax tables
Pie charts
Ledgers
Explanation: They reflect the economy's condition, like a barometer.
Question 5 of 15
The simple aggregative price index formula is:
(ΣP₁ ÷ ΣP₀) × 100
ΣP₁ × ΣP₀
ΣP₀ ÷ ΣP₁
ΣP₁ − ΣP₀
Explanation: P₀₁ = (ΣP₁ ÷ ΣP₀) × 100.
Question 6 of 15
If ΣP₀ = 80 and ΣP₁ = 100, the simple aggregative index is:
80
100
125
180
Explanation: (100 ÷ 80) × 100 = 125.
Question 7 of 15
The CPI measures changes in:
Retail prices for households
Wholesale prices
Industrial output
Exports only
Explanation: CPI tracks retail prices of household goods/services.
Question 8 of 15
The cost-of-living index is another name for the:
WPI
CPI
IIP
GDP
Explanation: The CPI is the cost-of-living index.
Question 9 of 15
The WPI measures changes in:
Wholesale prices of goods
Retail prices
Industrial output
Wages
Explanation: WPI measures wholesale (bulk) prices of goods.
Question 10 of 15
The Index of Industrial Production (IIP) measures the change in:
Prices
Volume of industrial output
Population
Rainfall
Explanation: IIP measures the volume of industrial production.
Question 11 of 15
Workers' dearness allowance is usually linked to the:
IIP
CPI
Rainfall index
GDP
Explanation: Dearness allowance is linked to the CPI (cost of living).
Question 12 of 15
A sustained rise in the general price level is:
Deflation
Inflation
Recession
Surplus
Explanation: It is inflation.
Question 13 of 15
Inflation reduces the ____ of money.
Weight
Purchasing power
Colour
Size
Explanation: Inflation lowers the purchasing power of money.
Question 14 of 15
If the index rises from 250 to 275 in a year, inflation is:
10%
25%
2.5%
275%
Explanation: (275 − 250)/250 × 100 = 10%.
Question 15 of 15
Inflation especially hurts people with:
Fixed incomes
No income data
Rising incomes
Index numbers
Explanation: Fixed-income earners' money buys less as prices rise.