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What is Chain Based Index Numbers?
Q. What is a percentage? Ans. Percent means "per hundred", or "out of 100". A percentage can be written as a ratio, or fraction, where the denominator (bottom) is 100.
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A chain based index is one whereas the index is calculated every year by using the previous year as the base year. This kind of index measures rate of change from year to year. This method is appropriate where weights are changing rapidly and items are constantly being brought into the index and unwanted items taken out. This can be a quantity or price index.
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