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Question -

Is the change in any price reflected in a price index number?



Answer -

No, the change in any price is not reflected in a price index number. Price index numbers measure and permit comparison of the prices of certain goods included in the basket being used to compare prices in the base period with prices in the current period. Moreover, an equal rise in the price of an item with large weight and that of an item with low weight will have different implications for the overall change in the price index.

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