Give the methods of calculating simple index and their formula.

Equal weightage is assigned to all the items included in the index number. There are two methods of calculating index number (i) simple aggregative method and (ii) Simple average of price relatives.

1. Simple aggregative method : This is the simplest method of calculating index numbers. In this method, total of the current year prices for the various commodities is divided by the total of the base year and the quotient multiplied by 100. Symbolically.

Where P₁ and P₀ indicate the price of the commodity in the current and base periods respectively.

2. Simple Average of price relatives : In this method, first of all, price relatives are calculated. A price relative is the price for the current period expressed as the percentage of the price of the base period. Symbolically,