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FAO eLearning Academy Index Numbers, National Accounts & Agricultural Economic Statistics: practice questions

FAO eLearning Academy - agricultural statistics courses · Global · Food and Agriculture Organization of the UN

Original practice questions written to the published syllabus · not past papers
10worked here, free
35written to this exam in this subject
10syllabus units

What this subject covers

The measures national statisticians compile: index-number theory and tests, wholesale and consumer price indices, agricultural production and parity indices, terms of trade, and national accounts with agriculture's gross value added. Business-statistics treatments of index numbers are in the Agribusiness track; this goes to compilation level.

In the exams: UPSC ISS Statistics IV (heavy, reported); SSC CGL JSO (heavy); RBI Grade B DSIM (present); state statistical-officer exams (heavy)

Where the 35 questions fall

How our questions for FAO eLearning Academy spread across the units of Index Numbers, National Accounts & Agricultural Economic Statistics. Difficulty: 7 easy, 18 medium, 10 hard.

Estimation of agricultural GVA and value of output9
Index numbers of agricultural production and area8
Parity index and terms of trade between agriculture and non-agriculture4
Growth rates: compound annual growth and trend estimation4
Inequality measures: Lorenz curve and Gini coefficient3
Wholesale and consumer price indices2
National accounts: GDP, GVA and the System of National Accounts2
Index numbers: Laspeyres, Paasche, Fisher and Marshall-Edgeworth1
Tests of index numbers: time reversal, factor reversal and circularity1
Chain-base indices, base shifting and splicing1

10 practice questions, worked

Choose an answer, then open the working. Each explanation says why the right answer is right and why the others are not.

1 · Chain-base indices, base shifting and splicing · hard

In chain-linked national accounts, the chain-linked volume of agriculture plus those of industry and services does not equal chain-linked GDP in most years. What does this show?

  1. A compilation error that must be corrected
  2. Double counting of agricultural intermediate inputs
  3. Non-additivity, a property of chain linking
  4. Use of basic prices for the components and market prices for GDP
Answer and working

C. Non-additivity, a property of chain linking

Chain-linked volumes are additive only in the reference year and the year after it; elsewhere the discrepancy is a known property of chaining, not an error. Shares should be computed from current-price data.

Further reading: Consumer Price Index Manual (IMF and partners, 2020); System of National Accounts 2008; Goon, Gupta and Dasgupta, Fundamentals of Statistics Vol. 2; Cowell, Measuring Inequality

2 · Index numbers of agricultural production and area · easy

An index of agricultural production is usually computed as

  1. A Laspeyres quantity index with base-period value weights
  2. A Paasche price index with current-period quantity weights
  3. An unweighted geometric mean of crop production relatives
  4. A Fisher ideal index of farm-gate prices of all crops
Answer and working

A. A Laspeyres quantity index with base-period value weights

Production relatives of each crop are weighted by the crop's value of output in the base period (production x average farm price), a Laspeyres quantity form. It measures volume, not price.

Further reading: Consumer Price Index Manual (IMF and partners, 2020); System of National Accounts 2008; Goon, Gupta and Dasgupta, Fundamentals of Statistics Vol. 2; Cowell, Measuring Inequality

3 · Index numbers of agricultural production and area · medium

A crop's production index is 105 and its area index is 120. What is the yield index, and what does it show?

  1. 114.3; yield rose while area expanded
  2. 85.0; yield fell while area shrank
  3. 126.0; yield rose faster than area
  4. 87.5; yield fell while area expanded
Answer and working

D. 87.5; yield fell while area expanded

Yield index = 105/120 x 100 = 87.5, below 100, so yield fell by 12.5%; production rose only because area rose by 20%. 114.3 inverts the ratio; 126 multiplies.

Further reading: Consumer Price Index Manual (IMF and partners, 2020); System of National Accounts 2008; Goon, Gupta and Dasgupta, Fundamentals of Statistics Vol. 2; Cowell, Measuring Inequality

4 · Parity index and terms of trade between agriculture and non-agriculture · easy

An index of prices received by farmers is 156 and an index of prices paid by farmers is 120, on a common base. What are the barter terms of trade?

  1. 76.9
  2. 36.0
  3. 187.2
  4. 130.0
Answer and working

D. 130.0

Barter terms of trade = 156/120 x 100 = 130: farm prices bought 30% more non-farm goods and inputs than in the base. 76.9 inverts the ratio; 36 is the difference in points.

Further reading: Consumer Price Index Manual (IMF and partners, 2020); System of National Accounts 2008; Goon, Gupta and Dasgupta, Fundamentals of Statistics Vol. 2; Cowell, Measuring Inequality

5 · Parity index and terms of trade between agriculture and non-agriculture · medium

The barter terms of trade of agriculture are 95 and the index of the quantity of farm output sold is 120. What are the income terms of trade?

  1. 114.0
  2. 79.2
  3. 215.0
  4. 126.3
Answer and working

A. 114.0

Income terms of trade = barter terms x quantity index / 100 = 95 x 120/100 = 114. Even with prices moving against farmers, larger sales raised the purchasing power of total marketed output. 79.2 divides 95 by 1.20.

Further reading: Consumer Price Index Manual (IMF and partners, 2020); System of National Accounts 2008; Goon, Gupta and Dasgupta, Fundamentals of Statistics Vol. 2; Cowell, Measuring Inequality

6 · Estimation of agricultural GVA and value of output · medium

A region produces 4 million tonnes of wheat at a farm-gate price of 25,000 currency units per tonne. Straw is valued at 12% of the grain value, and inputs total 30,000 million currency units. What is GVA from wheat, in million currency units?

  1. 70,000
  2. 112,000
  3. 142,000
  4. 82,000
Answer and working

D. 82,000

Grain output = 4 x 25,000 = 100,000 million; straw = 12% = 12,000; total output 112,000; GVA = 112,000 - 30,000 = 82,000. 70,000 omits the by-product; 112,000 is output, not value added.

Further reading: Consumer Price Index Manual (IMF and partners, 2020); System of National Accounts 2008; Goon, Gupta and Dasgupta, Fundamentals of Statistics Vol. 2; Cowell, Measuring Inequality

7 · Estimation of agricultural GVA and value of output · easy

In estimating the value of crop output, by-products such as straw and stalks are usually valued by

  1. Applying ratios of by-product value to main-product value
  2. Ignoring them, as they are not marketed products
  3. Treating them as intermediate consumption of livestock only
  4. Valuing them at the international price of the main crop
Answer and working

A. Applying ratios of by-product value to main-product value

By-products are part of output; their value is estimated from benchmark ratios of by-product to main product. Straw fed on the farm is also an input to livestock, which is why own-farm inputs need care.

Further reading: Consumer Price Index Manual (IMF and partners, 2020); System of National Accounts 2008; Goon, Gupta and Dasgupta, Fundamentals of Statistics Vol. 2; Cowell, Measuring Inequality

8 · Estimation of agricultural GVA and value of output · medium

Financial intermediation services indirectly measured (FISIM) enter the agricultural GVA calculation as

  1. Part of the value of output
  2. A tax on agricultural production
  3. Part of intermediate consumption
  4. Consumption of fixed capital
Answer and working

C. Part of intermediate consumption

FISIM, the implicit charge in interest margins on farm loans, is a service used up in production, so it is deducted with the other inputs. It is not output, a tax or depreciation.

Further reading: Consumer Price Index Manual (IMF and partners, 2020); System of National Accounts 2008; Goon, Gupta and Dasgupta, Fundamentals of Statistics Vol. 2; Cowell, Measuring Inequality

9 · Estimation of agricultural GVA and value of output · medium

Why are first estimates of agricultural GVA for a year usually revised?

  1. Advance crop estimates are replaced by final production data
  2. The SNA requires agriculture to be estimated twice
  3. Farm prices are only known after five years
  4. The base year changes each time a revision is made
Answer and working

A. Advance crop estimates are replaced by final production data

Early estimates rely on advance crop estimates and indicators; later, final production, livestock and fishery data arrive and the estimate is revised. Base-year changes are occasional, not every revision.

Further reading: Consumer Price Index Manual (IMF and partners, 2020); System of National Accounts 2008; Goon, Gupta and Dasgupta, Fundamentals of Statistics Vol. 2; Cowell, Measuring Inequality

10 · Inequality measures: Lorenz curve and Gini coefficient · medium

Which inequality measure can be split exactly into within-group and between-group components, such as rural and urban?

  1. Theil's entropy index
  2. The Gini coefficient
  3. The Palma ratio
  4. The share of the bottom 40%
Answer and working

A. Theil's entropy index

Theil's index is additively decomposable into a weighted sum of within-group indices plus a between-group term. The Gini decomposes cleanly only when group distributions do not overlap.

Further reading: Consumer Price Index Manual (IMF and partners, 2020); System of National Accounts 2008; Goon, Gupta and Dasgupta, Fundamentals of Statistics Vol. 2; Cowell, Measuring Inequality

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Index Numbers, National Accounts & Agricultural Economic StatisticsThe full study manual, free FAO eLearning AcademyFormat, sections and how it has changed

Index Numbers, National Accounts & Agricultural Economic Statistics for other exams

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