A major limitation of a fixed-base index is that it may:
Correct answer: B. Become less representative over time
- A. Use no reference period
- B. Become less representative over time
- C. Prevent comparison with the base year
- D. Always produce a value below 100
Explanation
Consumer habits, technology and available products may change, making an old fixed basket less representative. A fixed-base index still has a reference period and can be above or below 100.
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