[amp_mcq option1=”Arithmetic mean of Laspeyre’s and Paasche’s index” option2=”Harmonic mean of Laspeyre’s and Paasche’s index” option3=”Geometric mean of Laspeyre’s and Paasche’s index” option4=”None of the above” correct=”option3″]<\/p>\n
The correct answer is: C. Geometric mean of Laspeyre’s and Paasche’s index<\/p>\n
Fisher’s ideal index number is the geometric mean of Laspeyre’s and Paasche’s index numbers. It is a weighted average of the two index numbers, with the weights being the shares of the two groups in the total expenditure.<\/p>\n
Laspeyre’s index number is a price index that uses the prices of a base period to weight the quantities of the current period. Paasche’s index number is a price index that uses the quantities of the current period to weight the prices of the base period.<\/p>\n
The geometric mean of two numbers is the square root of their product. In the case of Fisher’s ideal index number, the geometric mean is the square root of the product of Laspeyre’s and Paasche’s index numbers.<\/p>\n
Fisher’s ideal index number is considered to be the most accurate price index because it takes into account both the prices and quantities of goods and services. It is also the most widely used price index.<\/p>\n
Here is a brief explanation of each option:<\/p>\n
[amp_mcq option1=”Arithmetic mean of Laspeyre’s and Paasche’s index” option2=”Harmonic mean of Laspeyre’s and Paasche’s index” option3=”Geometric mean of Laspeyre’s and Paasche’s index” option4=”None of the above” correct=”option3″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-55995","post","type-post","status-publish","format-standard","hentry","category-economics","no-featured-image-padding"],"yoast_head":"\n