The average salary (indicator) in Yeman was measured as YER (Yemeni Rial) 507,000 in 2011 and YER523,000 in 2013. At the same time, the cost of a small car has increased from YER3.65 million to YER3.92 million. Using the time series deflation method, calculate the Real Value Index of the small car (0 decimal places)
A) 100
B) 104
C) 108
D) 112

Question

Quizplus · Accepted Answer

The Real Value Index is calculated by dividing the nominal value in the current year by the nominal value in the base year and multiplying by 100. In this case, the nominal value of the small car in 2011 is YER3.65 million and the nominal value in 2013 is YER3.92 million. The average salary in 2011 is YER507,000 and the average salary in 2013 is YER523,000. Therefore, the Real Value Index of the small car is (3.92/3.65) * (507/523) * 100 = 104.

The Average Salary (Indicator) in Yeman Was Measured as YER