Word Count : 674

---

In the context of index numbers, the factor reversal test and time reversal test are two important tests used to evaluate the quality of an index number formula. The factor reversal test is used to test whether the index number formula gives consistent results when the relative importance of the different components in the base period changes. The time reversal test, on the other hand, is used to test whether the index number formula gives consistent results when the direction of time is reversed.

The Factor Reversal Test: The factor reversal test is performed by computing two index numbers using the same formula, but with the relative weights of the components in the base period interchanged. If the index numbers obtained are reciprocals of each other, then the index formula passes the factor reversal test.

Let's say we have two periods, period 0 (the base period) and period 1, with prices and quantities given as follows:

__________ ________ _____ _____ ________ ________ __________.
_______ _________ ____ _______ _________ ____ ______.
___ ___ ___ _____ ___ ____.
_____ __________ __________ ________ _______ _________ __________ ___ _________ ________ ____ ______.
______ ____ __________ __________ _________ _______ ____ ___ ______ _________.
______ _____ ________ _________ _________ __________ ______.
____ ___ ____ _____ ______ __________ ________.
_______ ______ ______ _________ _________ _________ _______ ___ ___.
_________ _______ ____ ______ ______ _________ ______.
________ _____ __________ __________ _________.
_____ __________ _____ _________ ________ _________ _______ _______ _________ _________.
___ _____ ____ _______ ___ ________ _______ ______ _________.
_________ ____ ______ ______ ______ ____ ____ ____.
________ _____ ________ _________ _____ __________ _______ _____ _________.
______ ______ _____ ____ ___ __________ _______ ___ ________ _______.
______ __________ _______ ______ __________.
_____ __________ _____ __________ _____ ______ ___ _________ _________.
_________ ________ ________ ________ ________ _____.
_________ _______ ________ ____ _______ ______ ______ _________.
______ ________ ______ __________ _______ __________ _____ _____.
_________ _____ ________ _____ ________ _____ _________ _________ __________.
______ _____ __________ ____ _____ __________ ________ ____ ___ ________ ____ ___.
_________ _____ _________ ____ _______ ___.
_________ ___ ________ ________ ____ _________ _________ _______.
____ __________ _________ ___ __________ ________ ____ ___ _____ ____ ________.
__________ _________ _______ __________ ___ ____ ____ ___ ____ _________.
_______ ____ _____ _________ ______.
____ ___ ______ ____ ______ ___.
__________ ____ ______ _______ _________.
_________ _______ ______ _________ ___ ____ ____ ______ ______.
_________ _________ _________ __________ _________ _______ _____ _________ _____ _______ _______ __________.
_______ __________ _______ _____ _____ ____ ___.
____ ___ ____ ________ ____ ____ ____ _________.
______ ________ _________ _____ ____ _______ _________ ___.
_________ _________ __________ ____ _______ _______ _______ _________ ____ _______ ______.
_____ ______ ______ ______ __________ ______ ____ _________ _________ ____ _______ ________.
_____ ________ ______ _________ ____.
____ ________ ______ ____ _______ ______ _______ _______ __________ __________ ____ __________.
_________ _____ _______ ___ ________ _____ ______ _____.
____ ___ ____ ___ _____ ________ ___ ___ ________.
_________ __________ ____ ___ ________.
________ _________ _________ ________ ____ ______.
_________ ____ ______ ______ ______ _______ _____.
__________ ______ ___ ___ ______.
______ __________ __________ _____ __________ ______ ___ ___.
__________ _________ ________ ______ ____ _________.
________ ______ ____ _________ ________ ____ ____ ______ _____.
_______ ________ ____ _________ ___ ______ _________ ______ ___ ______ _________.
_____ ______ ____ _____ _______ ______ ____ _____ _____.
_____ __________ ________ _____ ___ ______ ________ __________ _____.
_______ ___ _____ _______ __________ __________ __________ ______ ____ ___ ___ ________.
____ _______ __________ ______ ___ ___ ______ ______ _________ ________ ____ __________.
__________ _________ _____ _________ _________ ___.
________ ______ ______ __________ ______ ____ _________ _____ _______ _____.
__________ ___ ________ __________ __________.
_________ ______ ___ ________ _____ ____ _______ ___ ______ ______ __________ _______.
_________ __________ ____ ____ _________ ___ ___ _______ _______ ___.
_________ ________ _______ ____ __________ ________ ______ _________ ___ _________ ____.
_________ ________ ______ _________ _______ ________ _____ __________ ______ ____.
_________ _______ ___ _________ ____ _____ _________ ________ ____ ____ ____.
Get Full Answer on WhatsApp

Item	Quantity (Q0)	Price (P0)	Quantity (Q1)	Price (P1)

X	5	8	10	12	13	15	17	16
Y	8	12	14	10	13	16	14	17

 

Bring out the major properties of binomial distribution. Mention certain important uses of this distribution.

Define correlation coefficient. What are its properties?

Differentiate between seasonal variation and cyclical fluctuations in time series data. Outline the steps of the ratio-to-trend method.

Properties of a good estimator

Describe the factor reversal test and time reversal test in the context of index number. Does any index number formula satisfy both the above tests?