Methods of Constructing Index Numbers

At large numbers of formulae have been devised for constructing index numbers. Broadly speaking, they can be grouped under two heads:

(a)    Unweighted indices; and

(b)    Weighted indices.

In the unweighted indices weights are note expressly assigned whereas in the weighted indices weights assigned to the various items. Each of these types may be further divided under two heads:

(i)    Simple Aggregative, and

(ii)    Simple Average of Relatives.

The following chart illustrates the various methods.


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