ABSTRACT
Modern economic theory is making ever increasing use of index numbers. 1 This is a logical result of the predominant tendency toward quantitative analysis. In a loose qualitative description, such terms as “real wage” and “producer’s goods” may simply indicate the totality of commodities which have certain characteristics in common. But this simple interpretation fails to satisfy the theorist when he tries to find definite functional relations, for example, the supply and demand curves of these commodities. The complicated algebraic formulae of modern monetary theory are evidently built on the assumption that composite commodities have exactly the same definitely measurable dimensions of quantity, price, utility, etc., as any of the individual commodities.
