وَأَحْصَىٰ كُلَّ شَيْءٍ عَدَدًا
"And He has enumerated everything in numbers." (Allah perfectly counts and knows the exact measure of all creations).
Q1. An index number computed for a single variable is
called:
A. Simple index number ✓ Correct Answer
B. Composite index number
C. Weighted composite index
number
D. None
Explanation: An index based on only one item/variable is called a
simple index number.
Q2. An index number computed for a group of related
variables is called:
A. Simple index number
B. Composite index
number ✓ Correct Answer
C. Weighted composite index
number
D. None
Explanation: When several related variables/items are combined into
one index, it is called a composite index number.
Q3. An index number calculated for more than one item
is called:
A. Composite ✓ Correct Answer
B. Simple
C. Price relative
D. None
Explanation: Combining multiple items into a single index makes it a
composite index number.
Q4. Chaining process is a method of converting the
link relatives into:
A. Fixed base relatives ✓ Correct Answer
B. Quantities
C. Prices
D. None
Explanation: Chaining multiplies successive link relatives together to
convert them into fixed base relatives.
Q5. The chain relatives are the fixed base relatives
computed from:
A. Fixed base relatives
B. Link relatives ✓ Correct Answer
C. Both (a) and (b)
D. None
Explanation: Chain relatives are derived by successively multiplying
(chaining) the link relatives.
Q6. The fixed base relatives computed from link
relatives are called:
A. Chain relatives ✓ Correct Answer
B. Link relatives
C. Fixed base relatives
D. None
Explanation: This chaining process itself produces what are called
chain relatives.
Q7. The index number for the base year is:
A. 100 ✓ Correct Answer
B. Greater than 100
C. Less than 100
D. None
Explanation: By convention, the base year is always assigned an index
value of 100.
Q8. The other name of quantity index number is:
A. Volume index number
B. Quantum index number
C. Value index number
D. Both (a) and (b) ✓ Correct Answer
Explanation: Quantity index numbers are also known as volume index
numbers or quantum index numbers — both terms apply.
Q9. Laspeyre's index number suggested using ___ as
weights.
A. Base year quantity ✓ Correct Answer
B. Current year quantity
C. Current year price
D. All
Explanation: Laspeyre's index uses base year quantities as fixed
weights.
Q10. Paasche's index number suggested using ___ as
weights.
A. Base year quantity
B. Current year
quantity ✓ Correct Answer
C. Current year price
D. All
Explanation: Paasche's index uses current year quantities as weights.
Q11. Laspeyre's index has:
A. Upward bias ✓ Correct Answer
B. Downward bias
C. No bias
D. None
Explanation: Since it uses fixed base year quantities, Laspeyre's
index tends to overstate price rises — an upward bias.
Q12. Paasche's index has a:
A. Upward bias
B. Downward bias ✓ Correct Answer
C. No bias
D. None
Explanation: Using current year quantities, Paasche's index tends to
understate price rises — a downward bias.
Q13. To make comparisons, link relatives are
converted to:
A. Price relatives
B. Chain relatives ✓ Correct Answer
C. Quantity relatives
D. Value relatives
Explanation: Link relatives are chained together (multiplied
successively) to form chain relatives for comparison.
Q14. Link relatives are calculated using the:
A. Chain base method ✓ Correct Answer
B. Fixed base method
C. Simple aggregative method
D. Aggregate expenditure method
Explanation: Link relatives — the ratio of each period's value to the
immediately preceding period — are computed under the chain base method.
Q15. FBS stands for:
A. Federal Bureau of
Statistics ✓ Correct Answer
B. Football Statistics
C. First Book of Statistics
D. None
Explanation: FBS is the abbreviation for the Federal Bureau of
Statistics (Pakistan).
Q16. The chain index for the base year is:
A. 100 ✓ Correct Answer
B. Greater than 100
C. Less than 100
D. None
Explanation: Just like any index number, the base year in a chain
index is fixed at 100.
Q17. The link relative is the percentage ratio of a
given year's value with the:
A. First year value
B. Succeeding year value
C. Same year value
D. Preceding year value ✓ Correct Answer
Explanation: By definition, a link relative compares a given year's
value to the immediately preceding year's value.
Q18. Link relative = (Pₙ / ___) × 100:
A. Pₙ
B. Pₙ₋₁ ✓ Correct Answer
C. Pₙ₋₃
D. Pₙ₋₂
Explanation: Link relative uses the immediately preceding period's
value, Pₙ₋₁, in the denominator.
Q19. The common way used to measure inflation in
Pakistan is:
A. Price indicator
B. CPI ✓ Correct Answer
C. WPI
D. None
Explanation: The Consumer Price Index (CPI) is the standard measure
used to track inflation in Pakistan.
Q20. The inverse of the consumer price index number
can be used to measure the:
A. Purchasing power of
money ✓ Correct Answer
B. Man power
C. Water power
D. Electric power
Explanation: Taking the reciprocal of CPI (×100) gives the purchasing
power of money.
Q21. Indices used as a factor to cancel out the
effect of inflation are:
A. GMI
B. WPI
C. CPI ✓ Correct Answer
D. Both (a) and (b)
Explanation: CPI is commonly used to deflate nominal values and remove
the effect of inflation.
Q22. The index number that measures changes in the
producer's selling price is:
A. Whole sale price index
number ✓ Correct Answer
B. Consumer price index number
C. Sensitive Price Indicator
D. None
Explanation: The Wholesale Price Index (WPI) tracks prices at the
producer/wholesale level.
Q23. The index number of import and export prices
helps measure change in terms of:
A. Trade of the country ✓ Correct Answer
B. Purchasing power of money
C. Inflation
D. None
Explanation: Import/export price indices are used to gauge changes in
a country's trade position.
Q24. The geometric mean of the Laspeyre's and
Paasche's index numbers is called:
A. Marshall's index number
B. Fisher's index
number ✓ Correct Answer
C. Pearson's index number
D. Walsh's index number
Explanation: Fisher's Ideal Index is defined as the geometric mean of
the Laspeyre's and Paasche's indices.
Q25. A current year weighted index number is the:
A. Fisher's
B. Laspeyre's
C. Paasche's ✓ Correct Answer
D. Marshall's
Explanation: Paasche's index uses current year quantities as weights,
making it a current-year weighted index.
Q26. A base year weighted index number is the:
A. Paasche's
B. Laspeyre's ✓ Correct Answer
C. Fisher's
D. Walsh's
Explanation: Laspeyre's index uses base year quantities as weights,
making it a base-year weighted index.
Q27. Quantum index number is another name for:
A. Volume index number
B. Quantity index number
C. Value index number
D. Both (a) and (b) ✓ Correct Answer
Explanation: Quantum index number is simply another term for the
volume/quantity index number.
Q28. Laspeyre's price index number uses weights of:
A. Current year quantities
B. Current year prices
C. Base year quantities ✓ Correct Answer
D. Base year prices
Explanation: Laspeyre's price index is weighted using base year
quantities.
Q29. Paasche's price index number uses weights of:
A. Current year
quantities ✓ Correct Answer
B. Current year prices
C. Base year quantities
D. Base year prices
Explanation: Paasche's price index is weighted using current year
quantities.
Q30. The chain base method is better than the fixed
base method.
A. True ✓ Correct Answer
B. False
C. Partially true
D. None
Explanation: The chain base method adapts weights over time, generally
making it more responsive/accurate than a fixed base method.
Q31. Aggregate expenditure and Family Budget methods
are used for computing:
A. Consumer price index number
B. Retail price index number
C. Cost of living price index
number
D. All of these ✓ Correct Answer
Explanation: Both methods are standard techniques for computing
consumer price, retail price, and cost of living indices.
Q32. The most suitable average for index numbers is
the:
A. Harmonic mean
B. Arithmetic mean
C. Geometric mean ✓ Correct Answer
D. None
Explanation: The geometric mean is considered the most appropriate
average for constructing index numbers, since it handles ratios well.
Q33. The common way used to measure inflation in
Pakistan is through the:
A. Consumer price index
number ✓ Correct Answer
B. Retail price index number
C. Cost of living price index
number
D. All of these
Explanation: CPI is the standard, widely-used method to measure and
track inflation in Pakistan.
Q34. The aggregative expenditure method as the base
year weighted index number is given by:
A. Laspeyre ✓ Correct Answer
B. Paasche
C. Fisher
D. Pearson
Explanation: The base-year weighted version of the aggregative
expenditure method is Laspeyre's formula.
Q35. Laspeyre's index number gives more weight to the
commodities whose prices have:
A. Increased ✓ Correct Answer
B. Decreased
C. Not changed
D. None
Explanation: Since it uses fixed base year quantities, Laspeyre's
index effectively over-weights commodities with rising prices.
Q36. Paasche's index number gives less weight to the
commodities whose prices have:
A. Decreased
B. Increased ✓ Correct Answer
C. Not changed
D. None
Explanation: Paasche's index, using current-year quantities,
systematically under-weights commodities whose prices rose.
Q37. The index number of Pakistan's exports is a:
A. Composite index
number ✓ Correct Answer
B. Simple index number
C. Consumer price index number
D. None
Explanation: Since exports include many different commodities combined
into one index, it is a composite index number.
Q38. The value index number, V₀ₙ, is given by:
A. ΣPₙq₀ / ΣP₀q₀
B. ΣPₙqₙ / ΣP₀q₀ ✓ Correct Answer
C. ΣPₙqₙ / ΣPₙqₙ
D. ΣP₀q₀ / ΣPₙqₙ
Explanation: The value index compares the total current value (price ×
quantity, both current year) to the base year value.
Q39. In the family budget method, the weights are:
A. Quantity
B. Price
C. Value ✓ Correct Answer
D. Volume
Explanation: The family budget method uses values (expenditure) of
items as weights.
Q40. In the aggregative expenditure method, the
weights are:
A. Value
B. Price
C. Quantity ✓ Correct Answer
D. Volume
Explanation: The aggregative expenditure method uses quantities as the
weights applied to prices.
Q41. Value is equal to price multiplied by:
A. Value
B. Price
C. Quantity ✓ Correct Answer
D. None
Explanation: By definition, Value = Price × Quantity.
Q42. The aggregative expenditure method is given by:
A. Paasche
B. Laspeyer
C. Fisher
D. All of these ✓ Correct Answer
Explanation: Both Laspeyre's and Paasche's formulas (and their
combination, Fisher's) are variants of the aggregative expenditure method.
Q43. The aggregative expenditure method is:
A. Base year weighted
B. Current year weighted
C. Both (a) and (b) ✓ Correct Answer
D. None
Explanation: Depending on which quantities are used as weights, the
aggregative expenditure method can be either base-year weighted (Laspeyre) or
current-year weighted (Paasche).
Q44. CPI was computed in Pakistan for the first time
in:
A. 1947
B. 1960 ✓ Correct Answer
C. 1950
D. 1970
Explanation: Pakistan's Consumer Price Index was first computed in
1960.
Q45. The index that indicates change in the
producer's selling price is the:
A. Wholesale price
index ✓ Correct Answer
B. Consumer price index
C. Retail price index
D. Cost of living index
Explanation: The Wholesale Price Index reflects prices received by
producers/sellers, unlike the consumer-focused CPI.
Q46. The purchasing power of the rupee is given by:
A. (1/CPI) × 100 ✓ Correct Answer
B. CPI × 100
C. (WPI/CPI) × 100
D. None
Explanation: Purchasing power of money = (1/CPI) × 100, since it's the
inverse relationship with the price index.
Q47. If CPI = 123.4, the purchasing power of the
rupee is:
A. 100
B. 12340
C. 123400
D. 0.81 ✓ Correct Answer
Explanation: Purchasing power = (1/123.4) × 100 ≈ 0.81.
Q48. Chain indices are just the price relatives
computed by taking:
A. The first year as
base ✓ Correct Answer
B. The middle year as base
C. The average of the years as
base
D. None
Explanation: In the chain base method, relatives are ultimately linked
back to the original (first year) base period through successive chaining.
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