What are the two main types of index numbers?

• A. Price index and quantity index
• B. Gross index and Net index
• C. Composite index and Simple index
• D. Seasonal index and Cyclical index

Answer: (D)

Index numbers measure how a variable changes over time. The two main time-based types you focus on are seasonal and cyclical indices. Seasonal indices capture the regular, repeating fluctuations within a year—monthly or quarterly patterns driven by holidays, weather, or seasonal demand. They let you adjust forecasts to reflect expected variations that recur every year. Cyclical indices, on the other hand, reflect longer-lasting swings tied to the business cycle—ups and downs that stretch over several years due to broader economic expansions and contractions. Together, these two types describe the systematic time-based movements in data, helping analysts separate predictable seasonal effects and longer-run cycles from random fluctuations or underlying trends. Other ways of classifying index numbers exist, such as what is being measured or construction method, but seasonal and cyclical are the primary time-based patterns highlighted in this context.