Index numbers are used to measure the level of a phenomenon compared to a standard period. They are a statistical device that compares the general level of related variables in two or more situations through a number that indicates magnitude of change. Index numbers have characteristics like being specialized averages that involve two or more time periods, one being the base period, and they are expressed in percentages to show extent of change without using the percentage sign. They have universal application and are used to help measure relative change, act as a guide, compare economic parameters and standards of living, help formulate policies, and measure purchasing power and future trends.

1. INDEX NUMBERS, ITS MEANING, CHARACTERISTICS AND USES.
PREPARED BY RAGHUANTH

2. WHAT ARE INDEX NUMBERS?
 An Index Number is a number which is used to measure
the level of a certain phenomenon as compared to the
level of the same phenomenon at some standard period.
 It is a statistical device for comparing the general level of
magnitude of a group of related variables in two or more
situations.
 It is a number which indicates the change in magnitude.

3. CHARACTERISTICS OF INDEX NUMBERS
 Index numbers are specialized averages
- Averages : same units; Index Numbers : different units
 Two or more time periods are involved, one of
which is the base time period
 They are expressed in percentage - To show the extent
of change but no need to use % sign
 Index numbers measure changes not capable of
direct measurement - Used to study relative change
 Basis of comparison
- over a time or between places etc.
 Universal Application

4. Uses of Index Numbers
 Help to measure the relative change
 Act as Good guide
 Economic parameters
 They are the wage adjuster
 Helps in comparison
 Compare the standard of living
 Help in formulating policies
 Index numbers measure the purchasing power of money
 Helpful in determining future trend