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Sunday, May 15, 2011

Composite Index Number Examples

Definition: A composite index number is formed by combining two or more index numbers, and a weighting is usually given to each of the index in order to calculate the weighted average index number.

Formula:
Composite index = (Total of index * weighting) / Total weighting

Example 1:
The index of prices for transport is 100 compared to a given base year. The index for housing is 160 (compared to

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