Index numbers measure changes in the price level only. - Vidyadip

Question

Index numbers measure changes in the price level only.

✓

Answer

No, I do not agree with this statement.

Index numbers are statistical devices which are used to measure changes in some quantities which cannot be measured directly.
It shows the changes in the variables like price, quantity of output, exports, standard of living, cost of living, stock markets, etc.
Index numbers are like economic barometers, measuring changes in variables over time with respect to a chosen base year.
Hence, it is not right to say Index Numbers measures changes in price only.

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