Suppose we calculate the percent change in real GDP from year 1 to year 2 using both the Laspeyres and the Paasche indices. With the Laspeyres index we get 12 percent and with the Paasche index we get 9 percent. The chain-weighted growth of real GDP is ________ percent.
A) 1.5
B) 9.75
C) 1.33
D) 9.5
E) 10.5

Question

Quizplus · Accepted Answer

The chain-weighted growth rate is the geometric mean of the Laspeyres and Paasche indices. Calculating the geometric mean of 12% and 9% gives approximately 10.5%.

Suppose We Calculate the Percent Change in Real GDP from Year