What is the family budget method?

What is the family budget method?

Under this method, we study the family budgets of a large number of people and estimate the aggregate expenditure of the average family for various items. These values are used as weights. We then convert the current year’s prices into price relatives on the basis of the base year’s prices.

Do aggregative expenditure method and family budget method always give?

(D) None Of These. The correct answer is (A) Same Results.

What are the methods of constructing CPI?

Following two methods are used to construct consumer price index numbers – i Family Budget method or weighted average of relatives method. ii Aggregative Expenditure Method.

What are the methods of constructing consumer price index CPI mention their formulas also?

Methods of constructing consumer price Index

• Aggregate Expenditure method. This method is based upon the Laspeyre’s method. It is widely used. …
• Family budget method (or) Method of weight relatives method. This method estimates an aggregate expenditure of an average family on various items and it is weighted. It is given by.

What are the 3 types of budgets?

Budget could be of three types – a balanced budget, surplus budget, and deficit budget.

What is family budget home economics?

Family budget. Household budget is a plan for future expenditure of a given household. Budgeting involves planning ahead on how to spend the total money or income that one earns. THE INCOME: This includes the money and other economic resources available to the family for meeting their needs.

What is index number formula?

In this method, the index number is equal to the sum of price relatives divided by the number of items and is calculated by using the following formula: 3. Weighted Aggregative Method: In this method, different weights are assigned to the items according to their relative importance.

How is aggregate expenditure related to aggregate output?

Since aggregate expenditure is the total spending on the economy’s total output, imports are subtracted from exports, since the amount spent on imports is the amount not spent on the economy’s output. Aggregate Expenditure = Consumption + Investment + Government Purchases + Net Exports.

What is the equation for aggregate expenditure?

The equation for aggregate expenditure is: AE = C + I + G + NX. Written out the equation is: aggregate expenditure equals the sum of the household consumption (C), investments (I), government spending (G), and net exports (NX).

What is CPI and WPI?

> the wholesale price index (WPI) based inflation rate and. > the consumer price index (CPI) based inflation rate. The former is called the wholesale inflation rate and the latter is called the retail inflation rate. Both WPI and CPI are price indices.

What is fixed base method?

In fixed base method, a particular year is generally chosen arbitrarily and the prices of the subsequent years are expressed as relatives of the price of the base year.

What is chain base method?

⇒ In chain base method, the base period is : Notfixed. ⇒ In this method, there is no fixed base period; the year immediately preceding the one for which the price index has to be calculated is assumed as the base year.

Is CPI the same as inflation?

Inflation is an increase in the overall price level. The official inflation rate is tracked by calculating changes in a measure called the consumer price index (CPI). The CPI tracks changes in the cost of living over time. Like other economic measures it does a pretty good job of this.

What is the formula of laspeyres method?

The Laspeyres Index is calculated by working out the cost of a group of commodities at current prices, dividing this by the cost of the same group of commodities at base period prices, and then multiplying by 100. This means that the base period index number is always 100.

Which method of construction of CPI number is the laspeyres index number?

The Laspeyres Price Index is a consumer price index used to measure the change in the prices of a basket of goods and services relative to a specified base period weighting. Developed by German economist Etienne Laspeyres, the Laspeyres Price Index is also called the base year quantity weighted method.

What is the best budgeting method?

5 budgeting methods to consider

What are the types of budgets?

Different types of budgets

• Master budget. A master budget is an aggregation of lower-level budgets created by the different functional areas in an organization. …
• Operating budget. …
• Cash budget. …
• Financial budget. …
• Labor budget. …
• Static budget. …
• Estimated revenue. …
• Fixed cost.

Which type of budgeting is used in India?

Based on the estimates there are three types of Government budgets in India, they are, surplus budget, balanced budget, and deficit budget. You can read about the Union Budget 2021-22 Summary in the given link.