Which of these statements is NOT a limitation of a composite index?
A) A composite index may help inform complex decision making, such as taxation policy
B) A composite index risks being misinterpreted by a layperson
C) A composite index is only really suitable for giving an overall impression of change
D) A composite index may become inaccurate if weightings change over time

Question

Quizplus · Accepted Answer

A composite index is designed to provide a comprehensive overview or summary of various data points, often used in complex decision-making processes like economic analysis, policy formulation, and social science research. It does not inherently inform specific decisions such as taxation policy; rather, it provides data that could influence such decisions. The other options (B, C, D) accurately describe potential limitations or challenges associated with using composite indices.

Which of These Statements Is NOT a Limitation of a Composite