Index NumbersPYQ Jan 26Question 4245 of 197
All Questions

The test of shift ability of the base is called?

Options

AUnit test
BFactor reversal test
CTime reversal test
DCircular test
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Correct Answer

✅ Option d — Circular test

All Options:

  • AUnit test
  • BFactor reversal test
  • CTime reversal test
  • DCircular test

Detailed Solution & Explanation

In index numbers, the **Circular Test** is an extension of the time reversal test. It tests the shiftability of the base year.
A circular test requires that if an index number is computed for period b\displaystyle b with period a\displaystyle a as base (Iab\displaystyle I_{ab}), and for period c\displaystyle c with period b\displaystyle b as base (Ibc\displaystyle I_{bc}), and for period a\displaystyle a with period c\displaystyle c as base (Ica\displaystyle I_{ca}), then their product should be unity:
Iab×Ibc×Ica=1I_{ab} \times I_{bc} \times I_{ca} = 1
This property enables shifting of the base year without calculating the index numbers from the beginning. Therefore, the test of shiftability of the base is called the Circular Test.

Hence, **Option D** is the correct answer.

About This Chapter: Index Numbers

Paper

Paper 3: Quantitative Aptitude

Weightage

4-6 Marks

Key Topics

Construction of Index Numbers, Time Series

This chapter covers Construction of Index Numbers, Time Series and is part of Paper 3: Quantitative Aptitude in the CA Foundation exam.

View Official ICAI Syllabus

Exam Strategy Tip

This topic carries 4-6 Marks weightage. Focus on understanding core concepts rather than memorizing.

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In price index, when a new commodity is required to be added, which of the following index is used?

Fisher's ideal formula for calculating index number satisfies the ________

Shifted Price Index = Original Price IndexPrice Index of the year on which it has to be shifted×100\displaystyle \frac{\text{Original Price Index}}{\text{Price Index of the year on which it has to be shifted}} \times 100

If Laspeyres's Index Number is 250 and Paasche's Index Number is 160, then Fisher's Index number is

If ∑P0q0=240\displaystyle \sum P_0q_0 = 240, ∑P1q0=480\displaystyle \sum P_1q_0 = 480, ∑P0q1=600\displaystyle \sum P_0q_1 = 600 and ∑P1q1=192\displaystyle \sum P_1q_1 = 192, then Laspeyres's Index Number is

If ΣPnqn=249\displaystyle \Sigma P_n q_n = 249, ΣP0q0=150\displaystyle \Sigma P_0 q_0 = 150, ΣPnq0=145\displaystyle \Sigma P_n q_0 = 145 and Paasche's Index Number = 150, then Fisher's Ideal Price Index Number is

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