Suppose the Base Year for a Laspeyres Index Is 2001

question 2

Multiple Choice

Suppose the base year for a Laspeyres index is 2001.The value of the index is 1.3 in 2004 and 1.6 in 2006.By how much did the cost of the bundle increase between 2004 and 2006?

• A).3%
• B) 23%
• C).23%
• D) 60%

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Definitions:

Health Insurance Coverage

A form of insurance that covers the whole or part of the risk of a person incurring medical expenses.

Cafeteria-Style Plans

Flexible benefit plans allowing employees to choose from a variety of pre-tax benefits options to create a package tailored to their personal needs and preferences.

Flexible Spending Accounts

Tax-advantaged accounts that allow employees to save pre-tax dollars for eligible health care and dependent care expenses.

Defined-Benefit Plans

A type of pension plan where an employer promises a specified pension payment upon retirement, which is determined based on the employee’s earnings history, tenure of service, and age.