Fixed weight indexes
A) account for responses to supply shifts.
B) account for response to demand shifts.
C) generally become less accurate the farther in time they are from the base year.
D) generally become less accurate the closer in time they are to the base year.

Question

Quizplus · Accepted Answer

Fixed weight indexes are based on a fixed quantity of goods and their relative prices in a base year. As time goes on, the composition of goods and prices in the economy can change, which makes fixed weight indexes less accurate over time. This means that fixed weight indexes generally become less accurate the farther in time they are from the base year.

Fixed Weight Indexes