Base year for constructing an index number should ideally be: MCQ with Answer and Explanation

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Base year for constructing an index number should ideally be:

A. A year of war or economic crisis

B. The current year

C. The immediately preceding year

D. A normal year without extreme fluctuations

Answer: Option D

Solution (By JKExamLibrary)

A 'normal' base year avoids distortions in the index that would arise if the reference point was anomalous (e.g., drought, pandemic).

This question belongs to: Accountancy and Statistics Statistics

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Practice More Statistics Questions

Question #1 Report Error

Which of the following index numbers suffers from upward bias?

A. Paasche's Index

B. Laspeyres' Index

C. Kelly's Index

D. Fisher's Index

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Correct Answer: Option B

Explanation:
Laspeyres uses base-year quantities, ignoring the substitution effect when prices rise, causing an upward bias in inflation estimates.

This question belongs to: Accountancy and Statistics Statistics

Question #2 Report Error

The sum of squares of deviations from the mean is:

A. Minimum

B. Zero

C. Maximum

D. Equal to the variance

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Correct Answer: Option A

Explanation:
The sum of squared deviations from the mean is minimum; from any other point it would be larger.

This question belongs to: Accountancy and Statistics Statistics

Question #3 Report Error

Crude Birth Rate is expressed per:

A. 100 population

B. 1000 population

C. 1000 live births

D. 1000 women

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Correct Answer: Option B

Explanation:
CBR = (Number of live births in a year / Mid-year total population) × 1000.

This question belongs to: Accountancy and Statistics Statistics

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