Question

Define Circular test.

Answer 1

This requires that the index number is to work in a circular manner and this property enables us to find the index numbers from period to period without referring back to the original base each time. For 3 years 0(1998), 1(2005) and 2(2010):

Circular test is said to be satisfied if: P₀₁ × P₁₂ × P₂₀ = 1.