The increase in a Laspeyres price index over time is greater than the actual cost of living increase because

0 votes
    A Laspeyres index is a fixed-weight index measuring changes in the cost of living over time using a bundle of goods and services chosen in the current year and does not take into account consumers substituting purchases towards items that have become relatively cheaper than other goods over time to maintain satisfaction.
     A Laspeyres index is a fixed weight index measuring changes in the cost of living over time using a bundle of goods and services chosen in the base year and does not take into account consumers substituting purchases towards items that have become relatively cheaper than other goods over time to maintain satisfaction.
     A Laspeyres index is a chain-weight index measuring changes in the cost of living over time using a bundle of goods and services chosen in the current year and does not take into account consumers substituting purchases towards items that have become relatively cheaper than other goods over time to maintain satisfaction.
     A Laspeyres index is a chain-weighted price index that measures changes in the cost of living over time using a bundle of goods and services chosen in the base year and does not take into account consumers substituting purchases towards items that have become relatively cheaper than other goods over time to maintain satisfaction.
asked Jun 2, 2013 in Economics by anonymous
    

1 Answer

0 votes
A Laspeyres index is a fixed weight index measuring changes in the cost of living over time using a bundle of goods and services chosen in the base year and does not take into account consumers substituting purchases towards items that have become relatively cheaper than other goods over time to maintain satisfaction.
answered Jun 3, 2013 by Xyz ~Expert~ (3,650 points)



...