The circular test is most relevant for index numbers used in:
A. International price comparisons
B. Short-term monthly comparisons
C. Calculating real wages
D. Long-term trend analysis with changing bases
Answer: Option D
Solution (By JKSSB Mock Tests)
The circular test ensures consistency when chaining indices over multiple periods (e.g., 2020→2021→2022), crucial for long-term series where the base period may shift.
Explanation:
Standardization removes age structure effects by calculating what each population's death rate would be if it had the same age distribution as a standard population, enabling fair comparison of underlying mortality risks.
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