How to calculate the a price index, Microeconomics

Assignment Help:

Why does a price index based on constant weights tend to overstate inflation in periods after the base year when the price of one good is rising quickly compared to other goods?

Because people tend to buy cheaper substitutes instead of the good whose price is quickly increasing.  But the constant-weight index includes the similar quantities of the expensive goods.

 


Related Discussions:- How to calculate the a price index

Banks, Banks: A company which accepts deposits and issues new loans. It mak...

Banks: A company which accepts deposits and issues new loans. It makes profit by charging more interest for loans than it pays on deposits, and through several service charges. By

Growth rate, how to calculate growth rate in closed economy

how to calculate growth rate in closed economy

.redox, how to write an half equation

how to write an half equation

Consumer surplus, What is consumer surplus? What is its significance and wh...

What is consumer surplus? What is its significance and what causes it to change?

Neer vs reer, NEER Vs REER: In a situation where there are multiple tr...

NEER Vs REER: In a situation where there are multiple trade partners, the effect of cross-currency movements are judged by nominal effective exchange rate (NEER) and real effe

Derive a demand function, Zac consumes only pizza and chianti. He consumes ...

Zac consumes only pizza and chianti. He consumes these goods in fixed proportions: 2 slices of pizza for one glass of chianti. His income is $100 per week. a. Derive demand func

SAC and LAC, What is the explanation for SAC to be tangent to LAC?(In other...

What is the explanation for SAC to be tangent to LAC?(In other words, why must both be tangent to each other)?

Monopsony, Monopsony: Demonstrate (with a graph) how a ...

Monopsony: Demonstrate (with a graph) how a minimum wage can increase both the wage and employment in a monopsony market even when the government sets th

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd