Question 2 of 19beginner🧠 RememberMCQ1 mark
In most of the weighted index numbers the weight pertains to
Exercise: EXERCISES | Q: 2 | (Page Page 12)
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Explanation
Option (i) base year is correct. The textbook explicitly states that 'In general the base period weight is preferred to the current period weight.' The reason given is that calculating the weight every year is inconvenient. Additionally, using current period weights refers to changing values of different baskets which are strictly not comparable. While weights can technically refer to either base period or current period depending on the formula used (such as Laspeyre's formula using base year quantities or Paasche's formula using current year quantities), in most weighted index numbers, the weight pertains to the base year for practical reasons.