PRC-2 · Chapter 9 · Question 6 of 60
Fisher’s Ideal Index is technically defined as the:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Geometric mean of the Laspeyres and Paasche indices.
Explanation
Fisher's Ideal Index crosses the gap between the Laspeyres (base-weighted) and Paasche (current-weighted) methods by calculating the strict geometric mean (the square root of their product) of the two indices.
More Indices MCQs
- Q8If a worker's nominal monthly salary increases from Rs. 50,000 to Rs. 60,000, but the relevant price index rises from 100 to 125, what has…
- Q9When constructing an index using the 'Simple Aggregate Method', what is a major structural flaw?
- Q10Which specific statistical index tracks the cost of a fixed basket of goods and services typically purchased by an average household?
- Q11In standard index construction, why do economists occasionally perform a process known as 'base shifting'?
- Q12What does a Quantity Index measure?