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Unformatted text preview: Paasche index Amount of money at current-year prices that an individual requires to purchase a current bundle of goods and services divided by the cost of purchasing the same bundle in a base year. Comparing the Laspeyres and Paasche Indexes Just as the Laspeyres index will overstate the ideal cost of living, the Paasche will understate it because it assumes that the individual will buy the current-year bundle in the base period. fixed-weight index Cost-of-living index in which the quantities of goods and services remain unchanged. chain-weighted price index Cost-of-living index that accounts for changes in quantities of goods and services. 20:45 20:45...
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