The factor reversal test requires that: MCQ with Answer and Explanation

The factor reversal test requires that:
A. P₀₁ × P₁₂ = P₀₂
B. Index numbers are unitless
C. Price index × Quantity index = Value index
D. P₀₁ × P₁₀ = 1
Answer: Option C
Solution (By JKSSB Mock Tests)
Factor reversal test checks if the product of a price index and its corresponding quantity index equals the value index (Σp₁q₁/Σp₀q₀), ensuring consistency between price and quantity measurements.

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Practice More Statistics Questions

Question #1
The sum of deviations of all values from the median is minimized when measured in:
A. Cubed deviations
B. Squared deviations
C. Relative deviations
D. Absolute deviations

Correct Answer: Option D


Explanation:
Median minimizes sum of absolute deviations.

This question belongs to: Accountancy and Statistics Statistics
Question #2
The process of arranging data into groups on the basis of common characteristics is called:
A. Editing
B. Tabulation
C. Analysis
D. Classification

Correct Answer: Option D


Explanation:
Classification groups homogeneous data into categories based on similarities.

This question belongs to: Accountancy and Statistics Statistics
Question #3
The circular test is satisfied by:
A. Both A and C
B. Fisher index
C. Chain index using fixed weight price relatives
D. Fixed weight aggregates

Correct Answer: Option A


Explanation:
Fixed weight aggregates and chain indices with consistent linking can satisfy circular test, while Fisher does not.

This question belongs to: Accountancy and Statistics Statistics