Composite Index and Diffusion Index on an Excel spreadsheet
Not what you're looking for?
The following table presents data on three leading indicators for a three-month period. Construct the composite index (with each indicator assigned equal weight) and the diffusion index.
Leading Leading Leading
Month Indicator A Indicator B Indicator C
______________________________________________________________________________
1 100 200 30
2 110 230 27
3 120 240 33
NOTE: The composite index is obtained by calculating the percentage change for each series relative to the base month and then averaging these percentage changes. The percentage change from the first to the second month is 10 for indicator A, 15 for indicator B, and −10 for indicator C. Their simple average (since each indicator is given equal weight) is 5 percent. Taking the first month as the base period with a composite index of 100, we obtain the composite index of 105 for the second month. The diffusion index from month 1 to 2 is 66.7 (=2/3) because two indicators move up and move down.
Purchase this Solution
Solution Summary
This solution shows how to use an Excel spreadsheet to calculate the Composite Index and Diffusion Index for three Leading Indicators.
Purchase this Solution
Free BrainMass Quizzes
Economic Issues and Concepts
This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.
Pricing Strategies
Discussion about various pricing techniques of profit-seeking firms.
Economics, Basic Concepts, Demand-Supply-Equilibrium
The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.
Elementary Microeconomics
This quiz reviews the basic concept of supply and demand analysis.
Basics of Economics
Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.