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iNDEX NUMBr

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › iNDEX NUMBr

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by John Moffat.
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  • Author
    Posts
  • November 28, 2015 at 8:02 pm #286020
    ahmed02
    Member
    • Topics: 17
    • Replies: 15
    • ☆

    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.

    November 29, 2015 at 7:48 am #286059
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51551
    • ☆☆☆☆☆

    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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