The Laspeyres index is criticized because it: MCQ with Answer and Explanation

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The Laspeyres index is criticized because it:

A. Does not account for substitution effect

B. Is difficult to compute

C. Uses current period quantities

D. Satisfies time reversal test

Answer: Option A

Solution (By JKSSB Mock Tests)

Laspeyres uses fixed base period weights, ignoring consumer substitution to cheaper goods.

This question belongs to: Accountancy and Statistics Statistics

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Practice More Statistics Questions

Question #1

For two attributes A and B, if (A)=80, (B)=70, N=100, and they are independent, then (AB) should be:

A. 70

B. 80

C. 56

D. 50

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Correct Answer: Option C

Explanation:
Expected (AB) = (80×70)/100 = 56.

This question belongs to: Accountancy and Statistics Statistics

Question #2

Which of the following is a potential limitation of secondary data?

A. It is always outdated

B. It requires ethical clearance for every use

C. It cannot be used for statistical analysis

D. It may not align perfectly with the current research objectives

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Correct Answer: Option D

Explanation:
Secondary data was collected for a different purpose, so it may lack relevance, specificity, or compatibility with the current study's requirements, necessitating careful evaluation.

This question belongs to: Accountancy and Statistics Statistics

Question #3

Consumer Price Index (CPI) is most relevant for:

A. Setting wholesale trade policies

B. Calculating export competitiveness

C. Measuring producer cost inflation

D. Assessing changes in the cost of living for households

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Correct Answer: Option D

Explanation:
CPI measures average price changes paid by consumers for a basket of goods and services, directly indicating inflation's impact on household purchasing power and cost of living.

This question belongs to: Accountancy and Statistics Statistics

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