The purpose of a chain-weighted price index is to account for:
A) the costs of purchasing wholesale products like chains and industrial goods.
B) the changes in the quantities of goods and services purchased over time.
C) linkages in price changes among industrialized countries.
D) none of the above

Question

Quizplus · Accepted Answer

A chain-weighted price index is designed to account for changes in the quantities of goods and services purchased over time. It does this by giving greater weight to more recent prices and adjusting for changes in consumer behavior by using current prices as a reference point. This makes it a more accurate measure of inflation than traditional price indexes which may not take into account changes in consumer behavior and may overstate inflation. The index does not relate to the costs of purchasing wholesale products like chains and industrial goods, nor does it account for linkages in price changes among industrialized countries.

The Purpose of a Chain-Weighted Price Index Is to Account