PRC-2 · Chapter 9 · Question 41 of 60
When selecting a 'base year' for a price index, statisticians generally aim to pick a year that is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) A 'normal' economic year free from extreme crises, wars, or massive abnormalities.
Explanation
The base year serves as the foundation for all future comparisons (index = 100). If an abnormal crisis year is chosen, all subsequent data will appear artificially distorted.
More Indices MCQs
- Q43What is the formula to manually calculate a 'Simple Price Relative' for a single commodity?
- Q44In the standard mathematical notation for index construction, what does the expression 'pn * q0' explicitly dictate?
- Q45If an official government price index rises from 100 in 2015 to 142 in 2024, what is the precise interpretation of this data?
- Q46What is the standard formula utilized to calculate a 'Simple Price Relative' for a single, isolated commodity?
- Q47In the construction of a Laspeyres Price Index, what specific data is utilized as the fixed mathematical weighting factor?