Index NumbersPYQ Jan 26Question 4545 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
For any discrepancies in this question, email contact@cadada.in

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.

Related Comparison Tables

Cardinal vs Ordinal Utility: Measuring Satisfaction

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

Ready to Master Index Numbers?

Practice all 197 questions with instant feedback, earn XP, track your streaks, and ace your CA Foundation exam.

Start Practicing — It's Free