Weighted index numbers are preferred over simple indices because they:
A. Are easier to calculate
B. Do not require quantity data
C. Always satisfy the circular test
D. Account for the relative importance of different items in the basket
Answer: Option D
Solution (By JKExamLibrary)
Weighted indices assign weights (e.g., expenditure shares) to reflect the economic significance of items, providing a more realistic measure of overall change than simple indices that treat all items equally.
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