The Fisher’s index number is called an ideal index number due to the following reasons:
- Fisher’s index number considers and quantities of both the years, base year and current year in the construction of the index number.
- It satisfies both the important fundamental tests, time reversal and factor reversal tests, of index number.
- The geometric mean is used to calculate this index number which is the best average for the construction of index number.
- It balances the demerits of Laspeyre’s and Paasche’s index numbers.