CIMA BA1 · Chapter 10 · Question 7 of 10
The main reason for using a weighted index rather than a simple aggregate index is to:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Reflect the relative importance of each item in the index
Explanation
In a simple aggregate index every item counts equally, regardless of how much is bought. Weighting (by quantities or expenditure shares) ensures that items forming a larger part of spending have a greater influence on the index.
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