Using a Laspeyres index to calculate the Consumer Price Index (CPI)
A) weights quantities with current prices.
B) weights prices with base-year quantities.
C) weights quantities with base-year prices.
D) weights prices with current year quantities.

Question

Quizplus · Accepted Answer

The Laspeyres index, used in calculating the Consumer Price Index (CPI), weights prices with base-year quantities. This means it uses the quantity of goods and services consumed in the base year, multiplied by the prices of those goods and services in the current year, to measure how the price level has changed over time.

Using a Laspeyres Index to Calculate the Consumer Price Index