Which of the Following Statements Is True About the Laspeyres

question 15

Multiple Choice

Which of the following statements is true about the Laspeyres and Paasche indices?

• A) As long as the evaluation period is the same, the two indices usually yield the same value.
• B) The difference in the values of the two indices, if any, can usually account for the varying price levels across periods.
• C) The Laspeyres price index uses the current period quantities as weights, as opposed to the base period quantities used by the Paasche price index.
• D) The greater the length of time between periods, the higher the chances of variation between the values of the two indices.