PRC-2 · Chapter 9 · Question 16 of 60
What is a defining characteristic of the Laspeyres price index regarding its denominator?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) The denominator does not change from year to year because it uses fixed base-year quantities.
Explanation
In the standard Laspeyres price index, the denominator strictly uses base period quantities, meaning it fundamentally does not change from year to year.
More Indices MCQs
- Q18Which of the following statements accurately describes a chain index series?
- Q19The Consumer Price Index (CPI) is fundamentally designed to mathematically measure:
- Q20If an inflation price index is calculated as 116 in the current year with a base year index of 100, what is the precise interpretation?
- Q21A commodity's price was Rs. 4,500 in the base year 20X8 and rose to Rs. 5,400 in 20Y0. What is the simple price relative index for 20Y0?
- Q22Which statistical index number explicitly utilizes the current period's consumed quantities (q1) as its strict weighting factor?