# NCERT Solutions for Class 11 Economics Statistics for Economics Chapter 8

## Index Numbers Class 11

### Exercise : Solutions of Questions on Page Number : 118

Q1 :

An index number which accounts for the relative importance of the items is known as

(i) weighted index

(ii) simple aggregative index

(iii) simple average of relatives

An index number which accounts for the relative importance of the items is known as weighted index

An index number in which different items of the series are accorded weight age according to their relative importance is known as Weighted Index Numbers. It is the weighted average of the prices of different goods.

Q2 :

In most of the weighted index numbers the weight pertains to

(i) base year

(ii) current year

(iii) both base and current year

In most of the weighted index numbers, the weight pertains to current year.

In the Weighted Method of calculating index numbers, different goods are accorded weights according to the quantity brought. Laspeyre's method uses base year's quantities as weights, Paasche's method uses current year's quantities as weights and Fisher's method uses both base year as well as current year's quantities as base.

Q3 :

The impact of change in the price of a commodity with little weight in the index will be

(i) small

(ii) large

(iii) uncertain

Q4 :

A consumer price index measures changes in

(i) retail prices

(ii) wholesale prices

(iii) producers prices

Q5 :

The item having the highest weight in consumer price index for industrial workers is

(i) Food

(ii) Housing

(iii) Clothing

Q6 :

In general, inflation is calculated by using

(i) wholesale price index

(ii) consumer price index

(iii) producers' price index

Q7 :

Why do we need an index number?

Q8 :

What are the desirable properties of the base period?

Q9 :

Why is it essential to have different CPI for different categories of consumers?

Q10 :

What does a consumer price index for industrial workers measure?

Q11 :

What is the difference between a price index and a quantity index?

Q12 :

Is the change in any price reflected in a price index number?

Q13 :

Can the CPI number for urban non-manual employees represent the changes in the cost of living of the President of India?

Q14 :

The monthly per capita expenditure incurred by workers for an industrial centre during 1980 and 2005 on the following items are given below. The weights of these items are 75, 10, 5, 6 and 4 respectively. Prepare a weighted index number for cost of living for 2005 with 1980 as the base.

 Items Price in 1980 Price in 2005 Food

Q15 :

 INDEX OF INDUSTRIAL PRODUCTION BASE 1993 - 94 Industry Weight (in %) 1996 - 97

Q16 :

Try to list the important items of consumption in your family.

Q17 :

If the salary of a person in the base year is Rs 4,000 per annum and the current year salary is Rs 6,000, by how much should his salary rise to maintain the same standard of living if the CPI is 400?

Q18 :

The consumer price index for June, 2005 was 125. The food index was 120 and that of other items 135. What is the percentage of the total weight given to food?

Q19 :

An enquiry into the budgets of the middle class families in a certain city gave the following information;

 Expenses on items Food Fuel Clothing

Q20 :

Record the daily expenditure, quantities bought and prices paid per unit of the daily purchases of your family for two weeks. How has the price change affected your family?

Q21 :

Given the following data:

 Year CPI of Industrial Workers (1982 = 100) CPI of Urban Non-manual