2.  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

4. 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.

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

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

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

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

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

10.  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

11.  Simple Price Index  Simple Quantity Index

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

13. B. What is the simple quantity index for Shoes?

14.  Simple Aggregate Price Index  Simple Aggregate Quantity Index

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

16. B. What is the simple aggregate quantity index?

17.  Simple Average Price Index  Simple Average Quantity Index

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

19. B. What is the simple average quantity index?

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

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

29.  Calculate new CPI after shifting base year to 2006. Using new CPI convert rental for 2009 to real prices. YearCPISalaryRevised CPI 2005160.12,000 2006167.82,500 100.00 2007183.53,520 109.36 2008200.24,600 119.31 2009350.45,000 208.82

30. YearCPISalaryRevised CPI 2005160.12,000 2006167.82,500 100.00 2007183.53,520 109.36 2008200.24,600 119.31 2009350.45,000 208.82

31. YearCPISalaryRevised CPI 2005160.12,000 2006167.82,500 100.00 2007183.53,520 109.36 2008193.24,600 119.31 2009203.45,000 208.82

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