The Paasche index is likely to understate price rise because: MCQ with Answer and Explanation

Question Report Error

The Paasche index is likely to understate price rise because:

A. It uses base year quantities

B. It is unweighted

C. It uses current year quantities, reflecting substitution

D. It uses geometric mean

Answer: Option C

Solution (By JKExamLibrary)

Substitution away from goods whose prices rose relatively reduces their weight, leading to underestimation.

This question belongs to: Accountancy and Statistics Statistics

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Practice More Statistics Questions

Question #1 Report Error

Paasche price index is represented by:

A. Σp₁q₀ / Σp₀q₀ × 100

B. Σp₁q₀ / Σp₀q₁ × 100

C. Σp₁q₁ / Σp₀q₁ × 100

D. Σp₁q₁ / Σp₀q₀ × 100

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Correct Answer: Option C

Explanation:
Paasche uses current period quantities: Σp₁q₁ / Σp₀q₁ × 100.

This question belongs to: Accountancy and Statistics Statistics

Question #2 Report Error

A questionnaire that allows the respondent to write answers in his own words contains:

A. Multiple choice questions

B. Closed-ended questions

C. Ranking questions

D. Open-ended questions

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Correct Answer: Option D

Explanation:
Open-ended questions allow free expression without predefined options.

This question belongs to: Accountancy and Statistics Statistics

Question #3 Report Error

The Census of India 2011 was the:

A. 15th Census

B. 14th Census

C. 13th Census

D. 16th Census

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Correct Answer: Option A

Explanation:
Since the first synchronous census in 1881, 2011 was the 15th decennial census.

This question belongs to: Accountancy and Statistics Statistics

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