| Matching Items MCQs for Sub-Topics of Topic 14: Index Numbers & Time-Based Data Content On This Page | ||
|---|---|---|
| Introduction to Index Numbers | Construction of Index Numbers: Simple Methods | Construction of Index Numbers: Weighted Methods |
| Tests of Adequacy for Index Numbers | Introduction to Time Series | Components of Time Series |
| Methods of Measuring Secular Trend | Specific Index Numbers and Applications | |
Matching Items MCQs for Sub-Topics of Topic 14: Index Numbers & Time-Based Data
Introduction to Index Numbers
Question 1. Match the concept with its definition or role:
(i) Index Number
(ii) Base Period
(iii) Current Period
(iv) Price Relative
(v) Quantity Relative
(a) Period for which the index is calculated
(b) $\frac{\text{Price in current period}}{\text{Price in base period}} \times 100$
(c) Statistical device for measuring relative change
(d) Period against which comparison is made
(e) $\frac{\text{Quantity in current period}}{\text{Quantity in base period}} \times 100$
Answer:
Question 2. Match the function/use of Index Numbers with its description:
(i) Measuring Inflation
(ii) Deflating Values
(iii) Policy Formulation
(iv) Inter-spatial Comparison
(v) Comparing Changes over Time
(a) Comparing cost of living in different cities
(b) Understanding the rate of price increase
(c) Converting nominal income to real income
(d) Using indices to guide economic decisions
(e) Tracking percentage change from a base period
Answer:
Question 3. Match the term with its common representation in Index Number calculation:
(i) Price in Base Period
(ii) Price in Current Period
(iii) Quantity in Base Period
(iv) Quantity in Current Period
(v) Value in Base Period
(a) $q_1$
(b) $p_0$
(c) $p_1$
(d) $q_0$
(e) $p_0 q_0$
Answer:
Question 4. Match the characteristic with the appropriate period:
(i) Set to 100
(ii) Period of comparison
(iii) Period of reference
(iv) Updated periodically
(v) Subject to calculation
(a) Current Period
(b) Base Period Index
(c) Base Period
(d) Base Period (for revision)
(e) Current Period Index
Answer:
Question 5. Match the term with its related concept:
(i) Index Numbers
(ii) Base Shifting
(iii) Linking
(iv) Price Relatives
(v) Quantity Relatives
(a) Combining different index series
(b) Ratios for individual items
(c) Statistical indicators
(d) Expressing index relative to a new base
(e) Measure volume change for individual items
Answer:
Construction of Index Numbers: Simple Methods
Question 1. Match the simple method with its formula (Price Index):
(i) Simple Aggregate Method
(ii) Simple Average of Price Relatives (AM)
(iii) Simple Aggregate Quantity Index
(iv) Simple Average of Quantity Relatives (AM)
(v) Formula component $\sum p_1$
(a) $\frac{\sum q_1}{\sum q_0} \times 100$
(b) Sum of current prices
(c) $\frac{\sum p_1}{\sum p_0} \times 100$
(d) $\frac{1}{n} \sum \left(\frac{p_1}{p_0} \times 100\right)$
(e) $\frac{1}{n} \sum \left(\frac{q_1}{q_0} \times 100\right)$
Answer:
Question 2. Match the simple method with its characteristic or limitation:
(i) Simple Aggregate Method
(ii) Simple Average of Price Relatives
(iii) Limitation: Units of Price
(iv) Limitation: Absence of Weights
(v) Limitation: Extreme Relatives
(a) Affects Simple Aggregate Method
(b) Affects Simple Average of Price Relatives (AM)
(c) Affected by absolute price levels
(d) Common to all simple methods
(e) Based on price relatives
Answer:
Question 3. Match the calculation with the concept for the data:
Commodity A: Base Price $\textsf{₹}10$, Current Price $\textsf{₹}12$
Commodity B: Base Price $\textsf{₹}20$, Current Price $\textsf{₹}25$
(i) Price Relative for A
(ii) Price Relative for B
(iii) $\sum p_0$
(iv) $\sum p_1$
(v) Simple Aggregate Price Index
(a) 30
(b) $\frac{12+25}{10+20} \times 100 = \frac{37}{30} \times 100 \approx 123.33$
(c) $\frac{12}{10} \times 100 = 120$
(d) 37
(e) $\frac{25}{20} \times 100 = 125$
Answer:
Question 4. Match the description with the appropriate simple method:
(i) Affected by units of price quotation
(ii) Gives equal importance to percentage change
(iii) Uses sum of prices
(iv) Uses average of ratios
(v) Distortion by highly priced items
(a) Simple Average of Price Relatives
(b) Simple Aggregate Method
(c) Simple Aggregate Method
(d) Simple Aggregate Method
(e) Simple Average of Price Relatives
Answer:
Question 5. Match the concept related to simple indices with its formula component:
(i) Price Relative Ratio
(ii) Sum of Base Prices
(iii) Number of commodities
(iv) Simple Aggregate Quantity Index Numerator
(v) Simple Average of Price Relatives Denominator (AM)
(a) $\sum p_0$
(b) $n$
(c) $\frac{p_1}{p_0}$
(d) $\sum q_1$
(e) $n$
Answer:
Construction of Index Numbers: Weighted Methods
Question 1. Match the weighted index with the weights used:
(i) Laspeyres Price Index
(ii) Paasche Price Index
(iii) Laspeyres Quantity Index
(iv) Paasche Quantity Index
(v) Marshall-Edgeworth Price Index
(a) Base period prices ($p_0$)
(b) Current period quantities ($q_1$)
(c) Average of base and current quantities ($q_0+q_1$)
(d) Current period prices ($p_1$)
(e) Base period quantities ($q_0$)
Answer:
Question 2. Match the weighted index with its formula component:
(i) Laspeyres Price Index Numerator
(ii) Laspeyres Price Index Denominator
(iii) Paasche Price Index Numerator
(iv) Paasche Price Index Denominator
(v) Fisher's Ideal Price Index relation
(a) $\sum p_0 q_0$
(b) $\sqrt{P^L \times P^P}$
(c) $\sum p_1 q_1$
(d) $\sum p_1 q_0$
(e) $\sum p_0 q_1$
Answer:
Question 3. Match the characteristic with the weighted price index:
(i) Uses base period quantities
(ii) Uses current period quantities
(iii) Geometric mean of Laspeyres and Paasche
(iv) Uses average of base and current quantities
(v) Tends to understate price rise
(a) Paasche Index
(b) Laspeyres Index
(c) Fisher's Ideal Index
(d) Paasche Index
(e) Marshall-Edgeworth Index
Answer:
Question 4. Match the weighted index with its practical consideration:
(i) Laspeyres Index
(ii) Paasche Index
(iii) Fisher's Ideal Index
(iv) Weighted Average of Price Relatives (W = $p_0 q_0$)
(v) Need for current quantity data in each period
(a) Paasche Index
(b) Equivalent to Laspeyres Index
(c) Data for current quantities is difficult to obtain
(d) Requires data for both base and current quantities
(e) Data for base quantities suffices for multi-period price calculation
Answer:
Question 5. Match the concept with the type of index:
(i) Base year quantity weighted
(ii) Current year quantity weighted
(iii) Value index numerator
(iv) Base year value weighted price index
(v) Arithmetic mean quantity weighted
(a) Laspeyres Type
(b) Paasche Type
(c) Marshall-Edgeworth Type
(d) Laspeyres Price Index (equivalent)
(e) $\sum p_1 q_1$
Answer:
Tests of Adequacy for Index Numbers
Question 1. Match the test of adequacy with its condition (using index ratios):
(i) Time Reversal Test
(ii) Factor Reversal Test
(iii) Circular Test
(iv) Value Index
(v) Ideal Index
(a) $P_{01} \times Q_{01} = V_{01}$
(b) $P_{01} \times P_{10} = 1$
(c) Satisfies both TRT and FRT
(d) $\frac{\sum p_1 q_1}{\sum p_0 q_0}$
(e) $P_{01} \times P_{12} = P_{02}$
Answer:
Question 2. Match the index with the tests it satisfies:
(i) Laspeyres Index
(ii) Paasche Index
(iii) Fisher's Ideal Index
(iv) Marshall-Edgeworth Index
(v) Simple Aggregate Index
(a) Neither TRT nor FRT generally
(b) Satisfies TRT, Fails FRT
(c) Satisfies FRT, Fails TRT
(d) Satisfies both TRT and FRT
(e) Satisfies TRT and FRT
Answer:
Question 3. Match the test with its importance or implication:
(i) Time Reversal Test
(ii) Factor Reversal Test
(iii) Circular Test
(iv) Failure of Circular Test
(v) Value Index vs Price & Quantity Indices
(a) Consistency in base shifting/chaining
(b) Base shifting may lead to inconsistent results
(c) Symmetry with respect to time
(d) Overall change in value should equal combined change in price and quantity
(e) Symmetry with respect to price and quantity
Answer:
Question 4. Match the formula component with the test context:
(i) $\sum p_1 q_0$
(ii) $\sum p_0 q_1$
(iii) $\sum p_1 q_1 / \sum p_0 q_0$
(iv) Index from 1 to 0
(v) Product of P and Q indices
(a) Factor Reversal Test (result)
(b) Time Reversal Test (component)
(c) Paasche Price Index Denominator
(d) Laspeyres Price Index Numerator
(e) Laspeyres Price Index Denominator in $P_{10}$
Answer:
Question 5. Match the statement with the index type regarding tests:
(i) Fails both TRT and FRT (generally)
(ii) Satisfies TRT but not FRT
(iii) Satisfies FRT but not TRT
(iv) Satisfies both TRT and FRT
(v) Important for consistency over multiple periods
(a) Paasche Index
(b) Simple Aggregate Index
(c) Circular Test relevance
(d) Laspeyres Index
(e) Fisher's Ideal Index
Answer:
Introduction to Time Series
Question 1. Match the term with its definition:
(i) Time Series
(ii) Univariate Time Series
(iii) Cross-sectional Data
(iv) Time Series Analysis Objective
(v) Characteristic of Time Series
(a) Data for one variable over time
(b) Data collected at different points in time
(c) Data collected for different entities at one time point
(d) Observations ordered by time
(e) Forecasting and understanding patterns
Answer:
Question 2. Match the example with the data type:
(i) Annual GDP of India
(ii) Population of Indian states in 2022
(iii) Quarterly inflation rate in India
(iv) Temperature recorded every hour
(v) Production of cars by different companies in a month
(a) Time Series
(b) Cross-sectional Data
(c) Time Series
(d) Time Series
(e) Cross-sectional Data
Answer:
Question 3. Match the significance of time series analysis with its application area:
(i) Economic Forecasting
(ii) Sales Planning
(iii) Quality Control
(iv) Resource Management
(v) Policy Analysis
(a) Predicting future demand for a product
(b) Monitoring process variations over time
(c) Predicting inflation or GDP growth
(d) Planning inventory based on past consumption patterns
(e) Evaluating impact of government interventions
Answer:
Question 4. Match the concept with its description in time series:
(i) Observation
(ii) Time Point/Period
(iii) Ordered Sequence
(iv) Data Frequency
(v) Pattern Recognition
(a) Value recorded at a specific time
(b) The interval between successive observations
(c) The essential property of time series data
(d) Identifying underlying components or regularities
(e) When the data was collected
Answer:
Question 5. Match the term with a related characteristic or type of analysis:
(i) Univariate
(ii) Multivariate
(iii) Stationary
(iv) Non-stationary
(v) Forecasting
(a) Predicting future values
(b) Statistical properties change over time
(c) Analysis of multiple time series together
(d) Statistical properties are constant over time
(e) Analysis of a single time series
Answer:
Components of Time Series
Question 1. Match the component of time series with its description:
(i) Secular Trend
(ii) Seasonal Variation
(iii) Cyclical Variation
(iv) Irregular Variation
(v) Time Series Decomposition
(a) Unpredictable, erratic fluctuations
(b) Long-term smooth movement
(c) Fluctuations repeating over a fixed period (e.g., yearly)
(d) Process of separating components
(e) Fluctuations related to business cycles, period > 1 year
Answer:
Question 2. Match the example in Indian context with the time series component:
(i) Increase in literacy rate over 50 years
(ii) Increase in sale of fans in summer
(iii) Impact of a national election on economic sentiment
(iv) Recession period
(v) Sudden factory fire
(a) Cyclical Variation
(b) Irregular Variation
(c) Secular Trend
(d) Irregular Variation (could also be cyclical depending on scale and duration)
(e) Seasonal Variation
Answer:
Question 3. Match the model with its formula representation:
(i) Additive Model
(ii) Multiplicative Model
(iii) Component T
(iv) Component S
(v) Component I
(a) Seasonal effect
(b) $Y = T + S + C + I$
(c) Random effect
(d) Trend effect
(e) $Y = T \times S \times C \times I$
Answer:
Question 4. Match the component with its typical period:
(i) Secular Trend
(ii) Seasonal Variation
(iii) Cyclical Variation
(iv) Irregular Variation
(v) Annual Data
(a) Unpredictable
(b) Longer than a year (variable period)
(c) Fixed period (within a year)
(d) Long-term, gradual movement
(e) Seasonal component is absent by definition
Answer:
Question 5. Match the characteristic with the appropriate model type:
(i) Seasonal amplitude increases with trend
(ii) Seasonal amplitude is constant regardless of trend
(iii) Components are added together
(iv) Components are multiplied together
(v) Suitable for time series with positive values
(a) Additive Model
(b) Multiplicative Model
(c) Additive Model
(d) Multiplicative Model
(e) Multiplicative Model
Answer:
Methods of Measuring Secular Trend
Question 1. Match the method of measuring trend with its description:
(i) Freehand Curve Method
(ii) Method of Semi-Averages
(iii) Moving Average Method
(iv) Method of Least Squares
(v) Objective method
(a) Fits a line by minimizing squared errors
(b) Subjective graphical method
(c) Averages data in segments and connects the averages
(d) Calculates successive averages of fixed length
(e) Method of Least Squares
Answer:
Question 2. Match the method with its characteristic or limitation:
(i) Highly Subjective
(ii) Simple to calculate, sensitive to extremes
(iii) Smooths out short-term fluctuations
(iv) Provides a mathematical equation for the trend
(v) Loses data points at the ends
(a) Moving Average Method
(b) Freehand Curve Method
(c) Moving Average Method
(d) Method of Semi-Averages
(e) Method of Least Squares
Answer:
Question 3. Match the Least Squares concept with its interpretation (Linear Trend $Y = a + bT$, origin at middle):
(i) Coefficient 'a'
(ii) Coefficient 'b'
(iii) $\sum Y$
(iv) $\sum T^2$
(v) $\sum YT$
(a) Used in calculating 'b'
(b) Sum of observed values
(c) Trend value at the origin
(d) Rate of change per unit of time
(e) Used in calculating 'a' and 'b'
Answer:
Question 4. Match the Method of Semi-Averages step with its part:
(i) Dividing data
(ii) Calculating averages
(iii) Plotting averages
(iv) Connecting points
(v) Dealing with odd number of observations
(a) Finding arithmetic mean of each half
(b) Excluding the middle observation
(c) Into two equal parts
(d) To represent the trend line
(e) At the mid-point of each half-period
Answer:
Question 5. Match the type of trend or series with a suitable fitting method:
(i) Highly fluctuating series with strong seasonality
(ii) Series with a clear, consistent straight-line trend
(iii) Series showing a curved long-term movement
(iv) Preliminary trend estimation on a graph
(v) When a simple linear trend is assumed for ease
(a) Method of Least Squares (Linear)
(b) Method of Least Squares (Parabolic)
(c) Moving Average Method
(d) Freehand Curve Method
(e) Method of Semi-Averages
Answer:
Specific Index Numbers and Applications
Question 1. Match the specific index with what it measures:
(i) Consumer Price Index (CPI)
(ii) Wholesale Price Index (WPI)
(iii) Index of Industrial Production (IIP)
(iv) Price Index
(v) Quantity Index
(a) Change in the volume of industrial output
(b) Change in the general price level at the wholesale stage
(c) Change in the price of a basket of consumer goods and services
(d) Measure of changes in prices
(e) Measure of changes in volume/production
Answer:
Question 2. Match the specific index with its primary use/application in India:
(i) CPI
(ii) WPI
(iii) IIP
(iv) Real Wages calculation
(v) Dearness Allowance calculation
(a) Used for indexing salaries/pensions
(b) Indicator of inflation at the retail level
(c) Indicator of inflation at the wholesale level
(d) Measuring industrial growth momentum
(e) Requires using a price index to adjust nominal wages
Answer:
Question 3. Match the specific index with its typical coverage or level:
(i) CPI
(ii) WPI
(iii) IIP
(iv) Basket of goods and services
(v) Basket of industrial products
(a) Measured at the retail level
(b) Measured at the wholesale level
(c) Used for CPI
(d) Measures output volume
(e) Used for IIP
Answer:
Question 4. Match the limitation with the specific index or general concept:
(i) Substitution Bias
(ii) Excludes Services (traditionally)
(iii) Does not reflect individual experience
(iv) Quality Change
(v) Changes in relative importance of items
(a) General limitation of index numbers
(b) Limitation of WPI in India
(c) Limitation of fixed-weight price indices like CPI
(d) Difficulty in accounting for improvements/deteriorations
(e) Necessitates periodic revision of the index basket and weights
Answer:
Question 5. Match the calculation or concept with the appropriate index or formula:
(i) Base Year 2011-12
(ii) Base Year 2016
(iii) Used for dearness allowance
(iv) Measures output volume
(v) Deflating nominal values
(a) CPI (Combined) in India
(b) Requires a relevant Price Index
(c) IIP
(d) CPI
(e) WPI in India
Answer: