The Reason Weights Are Used in an Aggregate Index Is

question 33

Multiple Choice

The reason weights are used in an aggregate index is to

• A) ensure that all items have an influence on the index which is relative to their respective importance.
• B) ensure that expensive items are considered more heavily.
• C) ensure that current prices will influence the index more than base prices.
• D) None of these alternatives is correct.

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Definitions:

Implementing Instantaneously

The action of putting into effect or executing a plan or process without any delay.

Effectiveness

The degree to which an action, policy, or method achieves its intended outcome or result.

Predictable Lags

Delays between the implementation of monetary or fiscal policy and the observable effects of such actions on the economy.

Eliminate Inflation

The goal of reducing the rate of increase in the general price level of goods and services to zero.