Index-Number Calculations Flashcards

1️⃣ Familiarise yourself with the flashcards:

  • Look through all the flashcards to see what's on both sides.
  • Make sure you understand the information on each card. If something's unclear, click the link to the revision notes at the bottom of the page for more details.

2️⃣ Test yourself:

  • Look at the question or prompt on each card and try to remember the answer before flipping it over.
  • Check the answer and make a note of any cards you find challenging and need to go over more.

3️⃣ Consistently Review and Practice:

  • Use spaced repetition: spend more time on the cards you struggle with and go over them more often.
  • Regularly review all the flashcards to help you better understand and retain the information over time.

Note: We may include questions that have multiple correct answers. It's useful to remember specific examples to understand these concepts better.

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What is an index number in economics?

A number that shows how a value has changed compared with a base period set to 100.

What is the base year in an index and what value does it have?

It is the reference year for comparison. Its index value is 100.

How do you calculate an index number from actual data?

Divide the current value by the base-year value and multiply by 100. Example: £60 divided by £50, then times 100, equals 120.

How do you interpret index numbers above or below 100?

Above 100 means higher than the base by that percent. Below 100 means lower than the base by that percent. Example: 115 is 15% higher; 92 is 8% lower.

How do you find the percentage change since the base year from an index?

Subtract 100. Example: an index of 133 means a 33% rise since the base year.

How do you find the percentage change between two index numbers with the same base?

Subtract the old index from the new index, divide by the old index, then multiply by 100. Example: from 120 to 132 gives 12 divided by 120, times 100, equals 10%.

How do you convert an index back to an actual value if you know the base-year value?

Multiply the base-year value by the index and divide by 100. Example: base wage £400, index 112 gives £400 times 112, then divide by 100, equals £448.

How do you rebase an index to a new base year?

Divide each old index by the old index for the new base year, then multiply by 100. Example: old 2018 index 125, old 2020 index 150 gives new 2020 index 150 divided by 125, times 100, equals 120.

If the current value is double the base-year value, what is the index?

200, because it is twice the base (100 times 2).

What does CPI of 108 mean if 2015 = 100?

Average consumer prices are 8% higher than in 2015.

What should you do before comparing two index series that use different base years?

Rebase them to the same base year so both have 100 in the same year.

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