What is the basic year?
The basic year or reference year is used as a measure that can be compared to data from another year. The comparative data can be the price, value, cost or any other type of power. The use of this method allows the analyst to normalize the results over time by putting data into the context of the reference. It controls time factors such as inflation, allowing comparison of heterogeneous data on a normal basis. Finance, real estate and economy are only three examples of industries that use this concept considerably. In finance, the basic year is used to measure the performance of shares over time. Financial analysts select the reference year and determine the value of the index this year. 100. Changes in the index value in the coming years are expressed in terms of its percentage higher or lower than the standard brand.
In the real estate industry, the basic year is used as the firstIt is a year in commercial rentals to determine the increase in the common costs that the lessee should pay every year. The expenditure in the following year is expressed as a percentage of increases during the year One expenditure. Instead of attempting to tenants' expenses, the landlord will use the comparative approach. If normal expenditures increased by 20 percent over the year, the lessee's payment will also increase by twenty percent.
The basic year's approach in economics is extensively used to control inflation and other market conditions that affect price and value over time. It helps to distinguish between real and nominal prices or values. The nominal values are expressed in terms of the cost of the item if the money was used for its purchase in a certain year. The actual value is controlled for a time by expressing the price of the item in any year as far as the OJAKA is concerned, the price in the basic year.
This method is used to determine national standards to evaluate economic performance such as consumer indexprices (CPI) in the US. The gross domestic product (GDP) of the country is also calculated using the reference year to normalize prices over time. This way of comparing data is so ubiquitous that it is used in things great and small, from the analysis of housing markets to determines for unemployment benefits.