IIFT 2017 Question Paper Question 108

Instructions

The table below relates to data on Wholesale Price of India (WPI) for the period 2001-02 to 2015-16. WPI-based inflation is defined as percentage change in the value of the Index. Based on the table, answer the following questions:


Question 108

If PA has a 40 percent weight-age in the WPI-based inflation calculation in 2005-06, find the corresponding approximate percentage weights assigned to F&P; and MP in the WPl­ based inflation calculation for the same year.

Solution

For 2005-06,

WPI = PA*(40/100)+F&P*(x/100)+MP((60-x)/100)            (x is the percentage weight-age for F&P)

From table,

104.5 = 104.3(0.4) + 113.6*(x/100) + 102.4*(0.6- x/100)

x= 12

weight-age for F&P = 12

weight-age for MP = 60 - x = 60 - 12 =48



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