What are the laspeyers & paasche index

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Reference no: EM131009501

1. what are the Laspeyers & Paasche index?

2. why is it that each of the indices does not reflect accurately the impact of price increases?

There's a difference between those two indices in terms of quantities, where Laspeyers index uses the past period as base year, whereas Paasche index uses the current period as base year with respect to future period, but how this comes into play when it comes to having price increases? or this is not relevant at all and thre's something else going on here? Could anyone help me understand the relationship between those two indices and price increases?

Reference no: EM131009501

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