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What are the uses of Index Numbers?

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Index numbers are important tools of business and economic activity. Their main uses are:-

They are used to feel the pulse of the economy. Thus, the index numbers work as barometers of economic activity.
They help in framing suitable policies and take decisions relating to wages, prices, consumption etc.
They reveal trends and tendencies. They are used as indicators of inflationary or deflationary tendencies.
They are used to measure the purchasing power of money.
They help in forecasting future economic activity.

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Deependra Verma

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