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index number

index number, in econometrics, a figure reflecting a change in value or quantity as compared with a standard or base. The base usually equals 100 and the index number is usually expressed as a percentage. For example, if a commodity cost twice as much in 1970 as it did in 1960, its index number would be 200 relative to 1960. Index numbers are used especially to compare business activity, the cost of living, and employment; one of the most influential indexes in the United States is the Consumer Price Index (see under cost of living). Index numbers enable economists to reduce unwieldy business data into easily understood terms.

See R. Marris, Economic Arithmetic (1958).

The Columbia Electronic Encyclopedia, 6th ed. Copyright © 2012, Columbia University Press. All rights reserved.

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