Index Numbers

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4 Terms

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What are index number used for

Index allow economists to clearly see changes and differences in data sets over a time period

2
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How is an index number created

Divide the value of the year you are interested in by the value of the base year then multiply that number by 100

3
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How can you create a weighted index

Convert each year into index numbers for the present year

Multiply by the weight of that year to give the weighted index

Add all products together

Divide by the sum of every weight

4
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Problems with nominal gdp

Not inflation adjusted

Not population adjusted