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Laspeyres method and Paasche’s method do not satisfy
- a)Time Reversal Test
- b)Unit Test
- c)Factor Reversal Test
- d)none
Correct answer is option 'B'. Can you explain this answer?
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Laspeyres method and Paasche’s method do not satisfya)Time Rever...
Correct Answer :- B
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Laspeyres method and Paasche’s method do not satisfya)Time Rever...
Method are both methods used to calculate price indices.
The Laspeyres method calculates the price index by using a fixed basket of goods and services and comparing the cost of that basket in different time periods. It assumes that the basket of goods and services remains constant over time, which may not be accurate as consumer preferences and needs change. The Laspeyres method tends to overestimate inflation as it does not account for substitution effects when the price of a good or service increases.
The Paasche method, on the other hand, calculates the price index by using a variable basket of goods and services that changes over time to reflect current consumer preferences. It compares the cost of that basket in different time periods. The Paasche method tends to underestimate inflation as it does not account for the fact that consumers may switch to cheaper alternatives when the price of a good or service increases.
Both methods have their advantages and disadvantages and are used depending on the specific circumstances of the analysis.
The Laspeyres method calculates the price index by using a fixed basket of goods and services and comparing the cost of that basket in different time periods. It assumes that the basket of goods and services remains constant over time, which may not be accurate as consumer preferences and needs change. The Laspeyres method tends to overestimate inflation as it does not account for substitution effects when the price of a good or service increases.
The Paasche method, on the other hand, calculates the price index by using a variable basket of goods and services that changes over time to reflect current consumer preferences. It compares the cost of that basket in different time periods. The Paasche method tends to underestimate inflation as it does not account for the fact that consumers may switch to cheaper alternatives when the price of a good or service increases.
Both methods have their advantages and disadvantages and are used depending on the specific circumstances of the analysis.
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Laspeyres method and Paasche’s method do not satisfya)Time Rever...
Only Fisher index satisfy both time reversal test and factor reversal test
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Laspeyres method and Paasche’s method do not satisfya)Time Reversal Testb)Unit Testc)Factor Reversal Testd)noneCorrect answer is option 'B'. Can you explain this answer?
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Laspeyres method and Paasche’s method do not satisfya)Time Reversal Testb)Unit Testc)Factor Reversal Testd)noneCorrect answer is option 'B'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Laspeyres method and Paasche’s method do not satisfya)Time Reversal Testb)Unit Testc)Factor Reversal Testd)noneCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Laspeyres method and Paasche’s method do not satisfya)Time Reversal Testb)Unit Testc)Factor Reversal Testd)noneCorrect answer is option 'B'. Can you explain this answer?.
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