what is time reversal test & factor reversal test? give example

Dear student , 

Time reversal test = A test which is used to determine whether a given method will work in both ways, (i.e backward or forward) . This test provides that the formula of index number should be such that , the current on the base and the base on the current should multiply into unity(1).  Such that P01 x P10 = 1 (where , 0 denotes base year and 1 denotes current year)
For ex. Fisher's Index Formula satisfies this test.

Factor Reversal test = this test holds when the price index id multiply with quantity index is equal to 
 = V01

Such that : P​​​​​​01 x Q01  = V01
For Ex. = Fisher's Index formula 


  • 0
What are you looking for?