Why is Fisher's index number called an ideal number ? - Vidyadip

Question

Why is Fisher's index number called an ideal number ?

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Answer

Fisher's index number is called an ideal index number because :
1. It takes into account both base year and current year quantities.
2. It is the geometric mean of Laspeyre's and Paasche's index numbers, which is the best average.
3. It satisfies both the Time Reversal Test and the Factor Reversal Test.
4. It is free from bias.

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