A weighted aggregate price index where the weight for each item is computed by using the quantities of the base period is known as the
A)Paasche Index
B)Simple Index
C)Laspeyres Index
D)Consumer Price index
E)Producer Price index

Question

A weighted aggregate price index where the weight for each item is computed by using the quantities of the base period is known as the 
A)Paasche Index
B)Simple Index
C)Laspeyres Index
D)Consumer Price index
E)Producer Price index

Quizplus · Accepted Answer

A Laspeyres index uses the quantities of the base period to compute the weight for each item in the index. This method is useful when the base period is considered representative of average consumption patterns. It is commonly used in measuring inflation in price indices such as the CPI (Consumer Price Index) and PPI (Producer Price Index).

A Weighted Aggregate Price Index Where the Weight for Each