Index NumbersPYQ Jan 26Question 4247 of 197
All Questions

Which of the following index does not satisfy the time reversal test?

Options

AEdgeworth Marshall's index
BPaasche's index
CFisher's Ideal index
DBowley's Index
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Correct Answer

✅ Option d — Bowley's Index

All Options:

  • AEdgeworth Marshall's index
  • BPaasche's index
  • CFisher's Ideal index
  • DBowley's Index

Detailed Solution & Explanation

The **Time Reversal Test** requires that if the base year and current year are interchanged, the product of the two index numbers should be unity:
P01×P10=1P_{01} \times P_{10} = 1

Let us check the options:
- **Fisher's Ideal Index:** Satisfies the time reversal test (it is the geometric mean of Laspeyres' and Paasche's index numbers).
- **Marshall-Edgeworth Index:** Satisfies the time reversal test.
- **Paasche's Index:** Does not satisfy the time reversal test.
- **Bowley's Index:** Does not satisfy the time reversal test.

Since both Paasche's index and Bowley's index do not satisfy the time reversal test, there is a minor ambiguity in the question. However, following the textbook key, Bowley's Index is selected as the correct choice.

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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More Questions from Index Numbers

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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