Unit-3

Index No.
Correlation
Regression ananlysis
 Index No.
• Especial averages which measures relative
change.
Uses of index no.:
• Use to measure change in the wholesale price of
the country.
• To measure cost of living index no.
• Helps government to formulate policies.
• Helps in evaluation of various conditions of life.
• Computation of real wage,etc.
 Problems in construction of index No.
• Definition of the purpose
• Selection of base year.
• Selection of items and their varieties.
• Selection of data related to price and
quantities.
• Assignment of weights.
• Selection of suitable method.
• Choice of appropriate formula.
 correlation
• It is used to calculate relationship between
two variable ex. Ht and weight, rainfall and
yield, income and expenditure,etc.
Types of correlation
• Simple,partial and mutiple correlation.
• Positive and negative correlation.
• Perfect and imperfect correlation.
• Linear and non linear correlation
 Regression analysis
• Regression analysis is statistical tool for
measuring the average relationship between
any two or more closely related variables in
terms of the original units or their data.
• Types of regression analysis:
Simple and multiple regression.
Linear and non linear.
Total and Partial regression.
 Uses of regression analysis
• It provides the value of the dependent
variable with the help of independent
variable.
• Helps in measurement of error involve in
using the regression lines as a basis of
estimation.
• With regression we can measure the degree of
association or correlation between two
variable.
 Regression line

• There are two regression line the reasons are:

1.Change in independent and dependent
variables.
2.Assumption of the line of best fit.