As chief statistician for the county,you want to compute and publish every year a special-purpose index,which you plan to call Index of County Business Activity. Three series seem to hold promise as the basis for the index; namely,the price of cotton,the number of new cars sold,and the rate of money turnover for the county (published by a local bank). Arbitrarily you decide that money turnover should have a weight of 60 percent; number of new cars sold,30 percent; and the price of cotton,10 percent. What is the Index of County Business Activity for 1981 (the base year)and for 2006?
A)100 for 1981,139 for 2006
B)139 for 1981,100 for 2006
C)100 for 1981,61 for 2006
D)100 for 1981,100 for 2006

Question

As chief statistician for the county,you want to compute and publish every year a special-purpose index,which you plan to call Index of County Business Activity. Three series seem to hold promise as the basis for the index; namely,the price of cotton,the number of new cars sold,and the rate of money turnover for the county (published by a local bank). Arbitrarily you decide that money turnover should have a weight of 60 percent; number of new cars sold,30 percent; and the price of cotton,10 percent.  What is the Index of County Business Activity for 1981 (the base year)and for 2006?
A)100 for 1981,139 for 2006 
B)139 for 1981,100 for 2006 
C)100 for 1981,61 for 2006 
D)100 for 1981,100 for 2006

Quizplus · Accepted Answer

To calculate the Index of County Business Activity for a given year, we can use the formula:

Index = (0.6 * money turnover) + (0.3 * new cars sold) + (0.1 * cotton price)

Using data for the base year 1981:
money turnover = 100
new cars sold = 100
cotton price = 100

Therefore, the Index for 1981 would be:
Index = (0.6 * 100) + (0.3 * 100) + (0.1 * 100) = 100

Using data for 2006:
money turnover = 120
new cars sold = 150
cotton price = 200

Therefore, the Index for 2006 would be:
Index = (0.6 * 120) + (0.3 * 150) + (0.1 * 200) = 139

Hence, the correct answer is A. The Index of County Business Activity was 100 for 1981 and 139 for 2006.

As Chief Statistician for the County,you Want to Compute and Publish