For a given year,an index number of average prices across the economy (in Canada,the Consumer Price Index)is the ratio of the
A)price of several goods in the given year to that in the base year.
B)simple average price of all goods in the given year to that in the base year.
C)average price of several goods in the base year to that in the given year.
D)weighted prices of a typical bundle of goods purchased in a given year to that in the base year.
E)weighted prices of a typical bundle of goods purchased in the base year to that in the given year.

Question

Quizplus · Accepted Answer

An index number of average prices across the economy (such as the Consumer Price Index in Canada) is usually based on a weighted average of the prices of a typical bundle of goods purchased in a given year as compared to the base year. This helps to account for changes in the relative importance or frequency of certain goods or services over time. Therefore, the correct choice is D, which refers to the weighted prices of a typical bundle of goods purchased in a given year as compared to that in the base year.

For a Given Year,an Index Number of Average Prices Across