PRC-2 · Chapter 9 · Question 53 of 60
If an official government price index rises from a base of 100 in 2018 to exactly 165 in 2025, what is the precise statistical interpretation of this data?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Average prices of the goods in the index basket have increased by exactly 65% since 2018.
Explanation
Index numbers express relative changes as percentages compared to a fixed base of 100. A shift to 165 mathematically indicates an exact 65% increase in the variable being tracked.
More Indices MCQs
- Q55When formulating a Laspeyres *Quantity* Index (rather than a standard price index), what historical data is utilized as the mathematical…
- Q56Conversely, when formulating a Paasche *Quantity* Index, what data is exclusively used as the weighting factor?
- Q57What is an inherent statistical flaw of utilizing the 'Simple Aggregate Method' to construct a price index?
- Q58What is a 'Value Index' designed to mathematically measure?
- Q59When maintaining a long-term index series, what is the statistical process known as 'base shifting'?