PRC-2 · Chapter 9 · Question 48 of 60
Conversely, what specific data does the Paasche Price Index utilize as its weighting factor?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Current year quantities (qn)
Explanation
Unlike Laspeyres, the Paasche index measures the cost of today's exact consumption. It uses current year quantities (qn) as the weighting factor, requiring the denominator to be recalculated every single year.
More Indices MCQs
- Q50What is a massive, practical advantage of utilizing a 'Chain Base Index' method rather than a Fixed Base Index?
- Q51To properly convert a nominal wage into a 'real' wage (reflecting true inflation-adjusted purchasing power), what mathematical operation…
- Q52In economic statistics, the 'purchasing power of money' is mathematically defined strictly as:
- Q53If an official government price index rises from a base of 100 in 2018 to exactly 165 in 2025, what is the precise statistical…
- Q54If the sum of prices for four raw materials in the base year was Rs. 80, and the sum of their prices in the current year is Rs. 100, what…