True or False: Unweighted aggregate price indices account for differences in the magnitude of prices per unit and differences in the consumption levels of the items in the market basket.

Question

Quizplus · Accepted Answer

Unweighted aggregate price indices do not account for differences in the magnitude of prices per unit or differences in consumption levels. They simply calculate the average price of a market basket of goods without taking into account the relative importance of each item in the basket. Weighted price indices are necessary for accounting for these differences.

True or False: Unweighted Aggregate Price Indices Account for Differences