Index number are indispensable tools of economic and business analysis. Their significance can be best appreciated by the following points:
1. They help in farming suitable policies: Many of the economic and business policies are guided by index numbers. Index number are most widely used in the evaluation of business and economic conditions, there are large number of other fields also where index number are useful.
2.They reveal trends and tendencies: Since index numbers are most widely used for measuring changes over a period time.
3.Index numbers are very useful in deflating: Index number used to adjust the original data for price changes or to adjust wage for cost of living change and thus transform nominal wages into real wages.
0 Comments