Characteristics of Index Number

Main Characteristics of the measurement of Index number is as follows:

1) Relative measurement 

2) Specialized average

3) Measurement of changes not capable of direct measurement 

4) Measurement of common characteristics of a group of items

5) Comparison on the basis of time or place

6) Expressed in percentage

7) Universal use

 



1) Relative measurement: Index number are used for comparing relative change in a variable or group of variables at different point of time or place. 

2) Specialized average:  Index number is a special type of average that provides a measurement of relative changes in a variable or group of variables. 

3) Measurement of changes not capable of direct measurement:  with the help of index number, we can measure the changes in magnitude which are not capable in direct measurement due to their complex nature. 

4) Measurement of common characteristics of a group of items: Index express the common characteristics of a group of items change in index does not always mean that there is a change in all the variables for example, an increase in price index does not mean that price of all the commodities are increased.  

5) Comparison on the basis of time or place: Index number is used to measure the relative changes either on the basis of time or on the basis of place for example production of wheat in Uttar Pradesh for two different period or production of wheat in Uttar Pradesh and Haryana in the same period. 

6) Expressed in percentage: Index numbers are expressed in percentages to show the relative change through the sign of percentage (%) is never used.  

7) Universal use: The technique of Index number is being used extensively in all the fields now a days be it changes in production, trade, etc.

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