When Constructing a Weighted Aggregate Price Index, the Weights Usually

question 68

Multiple Choice

When constructing a weighted aggregate price index, the weights usually are _____.

• A)prices of substitute items
• B)prices of complementary items
• C)quantities of the respective items
• D)squared quantities of the respective items
• E)quality of individual items

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Definitions:

Bank Discount Quote

A method of quoting the price of a short-term money market instrument, like a Treasury bill, as a discount from its face value, not taking into account compound interest.

Face Value

The nominal or dollar value printed on a bond or other financial instrument, representing the amount to be repaid at maturity.

Municipal Bond

A debt security issued by a state, municipality, or county to finance its capital expenditures.

Corporate Bond

A debt security issued by a corporation to raise capital, whereby the issuer promises to repay the principal along with interest at specified dates.