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INFLATION INDEX AND INDEX NUMBERS R GIVEN BELOW:
quater— sales index—inflation index
1 ——- 109 ———100
2 ——- 120 ———-110
3 ——- 132———-121
4 ——- 145 ———-133
what is the real sales i.e. adjusted for inflation?Question:
1. How can i calculate the inflation index?
2.I dont understand the question>Answer:
– Approximateli constant and keepeing up with inflation.
Thank you.The inflation index is given in the question – you are not asked to calculate it!
The sales in the second quarter are 120. If there had been no inflation then they would have been 100/110 x 120 = 109 (the ‘real’ sales)
The sales in the third quarter are 132. If there had been no inflation then they would have been 100/121 x 132 = 110 (the ‘real’ sales).
If you do the same for the other two quarters then you will find that the ‘real sales’ are staying more or less constant – the actual sales are increasing in line with inflation.
Our free lectures on index numbers will help you.
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