Anda di halaman 1dari 10

History of Index Number Index numbers are meant to study the change in the effects of such factors which

cannot be measured directly. According to Bowley, Index numbers are used to measure the changes in some quantity which we cannot observe directly. For example, changes in business activity in a country are not capable of direct measurement but it is possible to study relative changes in business activity by studying the variations in the values of some such factors which affect business activity, and which are capable of direct measurement. Index numbers are commonly used statistical device for measuring the combined fluctuations in a group related variables. If we wish to compare the price level of consumer items today with that prevalent ten years ago, we are not interested in comparing the prices of only one item, but in comparing some sort of average price levels. We may wish to compare the present agricultural production or industrial production with that at the time of independence. Here again, we have to consider all items of production and each item may have undergone a different fractional increase (or even a decrease). How do we obtain a composite measure This composite measure is provided by index numbers which may be defined as advice for combining the variations that have come in group of related variables over a period of time, with a view to obtain a figure that represents the result of the change in the constitute variables. Index numbers may be classified in terms of the variables that they are intended to measure. In business, different groups of variables in the measurement of which index number techniques are commonly used are (i)price, (ii) quantity, (iii) value and (iv) business activity. Thus, we have index of wholesale prices, index of consumer prices, index of industrial output, index of value of exports and index of business activity, etc. Here we shall be mainly interested in index numbers of prices showing changes with respect to time, although methods described can be applied to other cases. In general, the present level of prices is compared with the level of prices in the past. The present period is called the current period and some period in the past is called the base period. Index Numbers Index numbers are statistical measures designed to show changes in a variable or group of related variables with respect to time, geographic location or other characteristics such as income, profession, etc. A collection of index numbers for different years, locations, etc., is sometimes called an index series. Simple Index Number A simple index number is a number that measures a relative change ina single variable with respect to a base. Composite Index Number A composite index number is a number that measures an average relative changes in a group of relative variables with respect to a base.

PART 1 (a) Describe in brief (i) price index, (ii) weightage, (iii) composite index. Answer : (i) Price index : an index number expressing the level of a group of commodity prices relative to the level of the prices of the same commodities during an arbitrarily chosen base period and used to indicate changes in the level of prices from one period to another.

(ii) Weightage : the assignment of a quota (as of members of a legislature) to a particular segment of the population as a special favor or concession in a proportion above that allowable on a strictly numerical basis

(iii) (iii) Composite index : A grouping of equities, indexes or other factors combined in a standardized way, providing a useful statistical measure of overall market or sector performance over time.

(b) State four ways of weightage representations. Find the examples of the representations using internet or any printed materials. 1) Pie Chart:

2) Bar Graph:

3) Line Graph

4) Histogram

PART 2 We often hear complaints from the public about inflation. It causes an increase in the household expenditure in a family. The household expenditure for every family is different. a) Complete Table 1 for your family's monthly expenditure for the year 2013. Answer:
Monthly Salary Number Of Family Member Item Average Expenditure for the year 2013 (To Te Nearest RM) 1200 240 600 210 1500 210 240 1500 300 6000 Percentage of Monthly Expenses (To The Nearest %) 20.0 4.0 10.0 35.0 25.0 3.5 4.0 25.0 5.0 100

8000 8000 8000

4 4 4 4

8000 4

Food Accomodation (Rental/Loan) Transportation ( Petrol/Loan/Bus Fre etc) Clothing Education Recreation Utilities (Water/Electricity/Telephone Medication Miscellaneous TOTAL Table 1

(b) If we want to compare the cost of living from one year to another, we have to calculate the price index that involves some of the items mentioned above. (i) In order to calculate the price index of all the items above, we have to consider the average monthly expenses of any previous year as the base year. Select the appropriate year as the base year.

Answer: Average Monthly Expenditure for the base year 2008 (RM) 1000 180

Item

Food Accomodation (Rental / Loan) Transportation (Petrol/ Loan / Bus fare etc) Clothing

450

120

Education Recreation Utilities (Water / Electricity / Telephone)

1000 150 200

Medication Miscellaneous TOTAL

700 2000 4000

ii) Hence Complete Table 2 Below: Answer: Item Average Monthly Expenses For The Year 2008 as the base year (RM) 1000 180 450 120 1000 150 200 700 200 4000 Table 2 Average Monthly Expenses For The Year 2013 (RM) 1200 240 600 210 1500 210 240 1500 300 6000

Food Accomodation (Rental/Loan) Transportation (Petrol/Loan/Bus Fare etc) Clothing Education Recreation Utilities (Water/Electricity/Telephone) Medication Miscellaneous TOTAL

(c) ( i) Complete Table 3 based on the above information.


Item Food Accomodation (Rental/Loan) Transportation (Petrol/Loan/Bus Fare etc) Clothing Education Recreation Utilities (Water/Electricity/Telephone Medication Miscellaneous TOTAL Price Indices For The Year 2013 Based On The Year 2008 120.00 133.33 133.33 150.00 140.00 140.00 120.00 214.28 150.00 1335.94 Table 3 Weightage 20.0 4.0 10.01 4.0 25.0 3.5 3.5 5.0 25.0 100

Formula to calculate price index :

ii) Hence , Calculate the composite index for the average monthly expenditure in the year 2013 based on the selected base year. Answer : Formula to calculate composite index

= (120.00 X 20) + (133.33 X 4) + (133.33 X 10) + (175 X 4) + (150 X 25) + (140 X 3.5) + (120 X 3.5) + (214.28 X 5) + (150 X 25)

(20 + 4 + 10 + 4 + 25 + 3.5 + 3.5 + 5 + 25) = 136.48

d) Make a conclusion about your familys expenditure based on your findings . Answer: Based on my findings, I found that the average expense for current year is higher than the base year 2008. We spent a total of RM1200 for food in 2013 compared to only RM 1000 in 2008. Other expenses such as accommodation, utilities, transportation, clothing, education, recreation, and medications also increase compared to the year 2008. This is due to the high inflation rate in 2008. After the year 2008, daily expenses for our family had increased due to the increasing of the prices of raw materials.

Anda mungkin juga menyukai