Current Affairs Exam > Current Affairs Questions > Which of the following statements on the calc...
Start Learning for Free
Which of the following statements on the calculation of the consumer price index using the Laspeyres index is correct: A. the weights in the CPI basket are constant and reflect the composition of the goods and services produced in the economy during the base year B. the weights in the CPI basket are constant and reflect the composition ofthe household consumption during the base year correct?
Most Upvoted Answer
Which of the following statements on the calculation of the consumer p...
Statement: The weights in the CPI basket are constant and reflect the composition of the goods and services produced in the economy during the base year.
Explanation:
The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. The Laspeyres index is a commonly used method to calculate the CPI.
Composition of the CPI basket:
The CPI basket represents the typical consumption pattern of urban consumers. It includes various goods and services such as food, housing, transportation, healthcare, education, and recreation. The composition of this basket is determined by the weights assigned to each item or category, which reflect the relative importance of these items in total consumer expenditure.
Constant weights:
In the Laspeyres index method, the weights assigned to the items in the CPI basket are based on the expenditure patterns during a specific base year. These weights remain constant over time, meaning they do not change with shifts in consumer behavior or changes in prices.
Reflecting the composition of the goods and services produced:
The weights in the CPI basket are not based on the composition of the goods and services produced in the economy, but rather on the composition of household consumption. The CPI aims to measure changes in the cost of living for consumers, so it focuses on the prices of goods and services that are actually purchased by households.
Significance of constant weights:
Using constant weights allows for meaningful comparisons of the price levels and inflation rates over time. By keeping the weights fixed, the Laspeyres index provides a consistent measure of price changes in the CPI basket. However, it does not account for changes in consumer behavior or shifts in preferences, which can affect the accuracy of the CPI as a measure of inflation.
In conclusion:
The correct statement regarding the calculation of the consumer price index using the Laspeyres index is that the weights in the CPI basket are constant and reflect the composition of household consumption during the base year. These weights are not based on the composition of goods and services produced in the economy, but rather on the expenditure patterns of urban consumers.
Explanation:
The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. The Laspeyres index is a commonly used method to calculate the CPI.
Composition of the CPI basket:
The CPI basket represents the typical consumption pattern of urban consumers. It includes various goods and services such as food, housing, transportation, healthcare, education, and recreation. The composition of this basket is determined by the weights assigned to each item or category, which reflect the relative importance of these items in total consumer expenditure.
Constant weights:
In the Laspeyres index method, the weights assigned to the items in the CPI basket are based on the expenditure patterns during a specific base year. These weights remain constant over time, meaning they do not change with shifts in consumer behavior or changes in prices.
Reflecting the composition of the goods and services produced:
The weights in the CPI basket are not based on the composition of the goods and services produced in the economy, but rather on the composition of household consumption. The CPI aims to measure changes in the cost of living for consumers, so it focuses on the prices of goods and services that are actually purchased by households.
Significance of constant weights:
Using constant weights allows for meaningful comparisons of the price levels and inflation rates over time. By keeping the weights fixed, the Laspeyres index provides a consistent measure of price changes in the CPI basket. However, it does not account for changes in consumer behavior or shifts in preferences, which can affect the accuracy of the CPI as a measure of inflation.
In conclusion:
The correct statement regarding the calculation of the consumer price index using the Laspeyres index is that the weights in the CPI basket are constant and reflect the composition of household consumption during the base year. These weights are not based on the composition of goods and services produced in the economy, but rather on the expenditure patterns of urban consumers.
Community Answer
Which of the following statements on the calculation of the consumer p...
Both are correct
if I am correct or not please inform
if I am correct or not please inform
Attention Current Affairs Students!
To make sure you are not studying endlessly, EduRev has designed Current Affairs study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in Current Affairs.
|
Explore Courses for Current Affairs exam
|
|
Top Courses for Current AffairsView all
Which of the following statements on the calculation of the consumer price index using the Laspeyres index is correct: A. the weights in the CPI basket are constant and reflect the composition of the goods and services produced in the economy during the base year B. the weights in the CPI basket are constant and reflect the composition ofthe household consumption during the base year correct?
Question Description
Which of the following statements on the calculation of the consumer price index using the Laspeyres index is correct: A. the weights in the CPI basket are constant and reflect the composition of the goods and services produced in the economy during the base year B. the weights in the CPI basket are constant and reflect the composition ofthe household consumption during the base year correct? for Current Affairs 2024 is part of Current Affairs preparation. The Question and answers have been prepared according to the Current Affairs exam syllabus. Information about Which of the following statements on the calculation of the consumer price index using the Laspeyres index is correct: A. the weights in the CPI basket are constant and reflect the composition of the goods and services produced in the economy during the base year B. the weights in the CPI basket are constant and reflect the composition ofthe household consumption during the base year correct? covers all topics & solutions for Current Affairs 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following statements on the calculation of the consumer price index using the Laspeyres index is correct: A. the weights in the CPI basket are constant and reflect the composition of the goods and services produced in the economy during the base year B. the weights in the CPI basket are constant and reflect the composition ofthe household consumption during the base year correct?.
Which of the following statements on the calculation of the consumer price index using the Laspeyres index is correct: A. the weights in the CPI basket are constant and reflect the composition of the goods and services produced in the economy during the base year B. the weights in the CPI basket are constant and reflect the composition ofthe household consumption during the base year correct? for Current Affairs 2024 is part of Current Affairs preparation. The Question and answers have been prepared according to the Current Affairs exam syllabus. Information about Which of the following statements on the calculation of the consumer price index using the Laspeyres index is correct: A. the weights in the CPI basket are constant and reflect the composition of the goods and services produced in the economy during the base year B. the weights in the CPI basket are constant and reflect the composition ofthe household consumption during the base year correct? covers all topics & solutions for Current Affairs 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following statements on the calculation of the consumer price index using the Laspeyres index is correct: A. the weights in the CPI basket are constant and reflect the composition of the goods and services produced in the economy during the base year B. the weights in the CPI basket are constant and reflect the composition ofthe household consumption during the base year correct?.
Solutions for Which of the following statements on the calculation of the consumer price index using the Laspeyres index is correct: A. the weights in the CPI basket are constant and reflect the composition of the goods and services produced in the economy during the base year B. the weights in the CPI basket are constant and reflect the composition ofthe household consumption during the base year correct? in English & in Hindi are available as part of our courses for Current Affairs.
Download more important topics, notes, lectures and mock test series for Current Affairs Exam by signing up for free.
Here you can find the meaning of Which of the following statements on the calculation of the consumer price index using the Laspeyres index is correct: A. the weights in the CPI basket are constant and reflect the composition of the goods and services produced in the economy during the base year B. the weights in the CPI basket are constant and reflect the composition ofthe household consumption during the base year correct? defined & explained in the simplest way possible. Besides giving the explanation of
Which of the following statements on the calculation of the consumer price index using the Laspeyres index is correct: A. the weights in the CPI basket are constant and reflect the composition of the goods and services produced in the economy during the base year B. the weights in the CPI basket are constant and reflect the composition ofthe household consumption during the base year correct?, a detailed solution for Which of the following statements on the calculation of the consumer price index using the Laspeyres index is correct: A. the weights in the CPI basket are constant and reflect the composition of the goods and services produced in the economy during the base year B. the weights in the CPI basket are constant and reflect the composition ofthe household consumption during the base year correct? has been provided alongside types of Which of the following statements on the calculation of the consumer price index using the Laspeyres index is correct: A. the weights in the CPI basket are constant and reflect the composition of the goods and services produced in the economy during the base year B. the weights in the CPI basket are constant and reflect the composition ofthe household consumption during the base year correct? theory, EduRev gives you an
ample number of questions to practice Which of the following statements on the calculation of the consumer price index using the Laspeyres index is correct: A. the weights in the CPI basket are constant and reflect the composition of the goods and services produced in the economy during the base year B. the weights in the CPI basket are constant and reflect the composition ofthe household consumption during the base year correct? tests, examples and also practice Current Affairs tests.
|
|
Explore Courses for Current Affairs exam
|
|
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
Follow Us
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup