Suppose the base year for a Lespeyres index is 2001.The value of the index is 1.3 in 2004 and 1.6 in 2006.By how much did the cost of the bundle increase between 2004 and 2006?
A) 0.3%
B) 23%
C) 0.23%
D) 60%

Question

Quizplus · Accepted Answer

The Lespeyres index in 2004 is 1.3, and in 2006 it is 1.6. The increase in the index from 2004 to 2006 is 1.6 - 1.3 = 0.3. To find the percentage increase, divide the increase by the 2004 index: 0.3 / 1.3 = 0.2307, or 23%.

Suppose the Base Year for a Lespeyres Index Is 2001