 Definition  Unweighted and Weighted Index Numbers ( Simple Index Numbers, Laspeyre’s, Paasche’s Index, Fisher’s “Ideal” Index)  CPI ( Consumer Price Index )  Issues in using Index Numbers

An index number describes how collected data (statistics) changes over time. They are often used for comparison between price, quantity and value between different time periods. It provides a summary of information in a simple form and it is widely used by government bodies, for economic policy and business information.

A cup of coffee in a particular café cost $10 in In 2002, an identical cup of coffee cost $15. How has the price changed between 1995 and 2002? 1995 Base period $ Given period $15 Pg Pb Index number=

 Simple Index  Simple Composite (aggregate) Index  Simple Average Index

 Simple Index Numbers Simple Price Index Simple Quantity Index  Composite (aggregate) Index  Simple Average Index

 Simple Index  Simple Composite (aggregate) Index Simple Composite (aggregate) Price Index Simple Composite (aggregate) Quantity Index  Simple Average Index

 Simple Index  Simple Composite (aggregate) Index  Simple Average Index Simple Average Price Index Simple Average Quantity Index

 Simple Index Simple Price Index Simple Quantity Index  Simple Composite (Aggregate) Index Simple Composite (Aggregate) Price Index Simple Composite (Aggregate) Quantity Index  Simple Average Index Simple Average Price Index Simple Average Quantity Index

 Simple Price Index  Simple Quantity Index

A. What is the simple price index for Racquets? The price of racquets increased by 33.33% from 2007 to 2009.

B. What is the simple quantity index for Shoes?

 Simple Aggregate Price Index  Simple Aggregate Quantity Index

A. What is the simple aggregate price index? The total price of the selected items increased by 7.84% from 2007 to 2009.

B. What is the simple aggregate quantity index?

 Simple Average Price Index  Simple Average Quantity Index

A. What is the simple average price index? The price of the selected items, on average, increased by 7.84% from 2007 to 2009.

B. What is the simple average quantity index?

 Laspeyre’s Index  Paasche’s Index  Fisher’s “Ideal” Index

 It examines the changes in the price of groups of goods and services referred to as “the basket”.

 Calculate new CPI after shifting base year to Using new CPI convert rental for 2009 to real prices. YearCPISalaryRevised CPI , , , , ,

YearCPISalaryRevised CPI , , , , ,

YearCPISalaryRevised CPI , , , , ,

 Choice of Formula  Choice of “Basket”  Choice of Price  Choice of Base year