Figure 2-2 Index Values for Steel and Newsprint Output
table that the output of steel has shown significantly more percentage
variability than has the output of newsprint. This is also clear in Figure
2.
Comparing the time paths of two variables is much easier when index
numbers are used. Since both index numbers are equal to 100 in the base
year, relative volatility and trends become clear. Steel output is clearly
more volatile in percentage terms than newsprint output. Steel output
also has an upward trend, whereas newsprint output appears to have
little or no trend.
The formula of any index number is
Valueofindex
inanygivenperiod = ×^100Absolutevalueingivenperiod
Absolutevalueinbaseperiod