Exam 17: Index Numbers

The take-home pay of an employee working in an urban area for 1993 and 2007 are as follows. If the CPI rose from 159 in 1993 to 210 in 2007 (1982-84 = 100),what was the "real" take-home pay of the employee in 2007?

Étienne Laspeyres developed a method in the latter part of the 18th century to determine a weighted index using base-period weights.

A value index method computes a simple aggregate index.

Which of the following statements is true about price-weighted indexes? I. The Laspeyres index uses base-period quantities as weights. II. The Paasche index tends to underweight goods whose prices have gone down. III. The Paasche index uses current-period quantities as weights.

As chief statistician for the county,you want to compute and publish every year a special-purpose index,which you plan to call Index of County Business Activity. Three series seem to hold promise as the basis for the index; namely,the price of cotton,the number of new cars sold,and the rate of money turnover for the county (published by a local bank). Arbitrarily you decide that money turnover should have a weight of 60 percent; number of new cars sold,30 percent; and the price of cotton,10 percent. What is the Index of County Business Activity for 1981 (the base year)and for 2006?

The Paasche method uses the amounts consumed in the base period,q₀,as weights to determine a price index.

Data for fuel oil and gasoline purchased at wholesale prices for 2006 and 2010 are shown in the following table. What is your interpretation of the Laspeyres price index?

What does a typical market basket of goods and services include?

The Consumer Price Index is ________.

The Consumer Price Index (CPI)measures the change in prices of a fixed market basket of goods and services from one period to another.

An example of a weighted index is P = p_t/p₀.

You are given the following information on selected food items: The Laspeyres price index when the current period is 2013 and the base year is 2006 is ________.

The number of items produced and the price per item for the Duffy Manufacturing Company are as follows. What is the value index of production for 2006 using 1990 as the base period?

All indexes have the same base,namely 1982-84,written 1982-84 = 100.

Real income is computed by ________.

The Consumer Price Index in June 2006 was 159.3 (1982-84 = 100). What does this indicate about prices from 1982-84 to June 2006?

If the Consumer Price Index in June 2006 was about 202.9 (1982-84 = 100),what was the purchasing power of the dollar?

An index of 239.2 represents a 239.2% change.

Data for fuel oil and gasoline purchased at wholesale prices for 2006 and 2010 are shown in the following table. What is the value index?

The Laspeyres method computes a weighted index.