ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The base year is the year in which an index is set to 100. A base year is the first series of years which is set at an arbitrary amount of 100. It is used for comparison by a price index.

Detailed explanation-2: -In the calculation of an index the base year is the year with which the values from other years are compared. The index value of the base year is conventionally set to equal 100. Generally, indices in short-term statistics (STS) are calculated on a monthly or quarterly basis.

Detailed explanation-3: -Developed by German economist Etienne Laspeyres, the Laspeyres Price Index is also called the base year quantity weighted method.

Detailed explanation-4: -A base year is used for comparison in the measure of a business activity or economic or financial index. For example, to find the rate of inflation between 2016 and 2021, 2016 is the base year or the first year in the time set.

Detailed explanation-5: -Base-year analysis uses a baseline time period against which other periods can be measured. Usually, an index is created where the base year is set to a value of one or 100. Base-year analysis is often used when apples-to-apples comparisons want to be made across time.