In 1991, good x cost $5 and good y cost $1. They now cost $9 and $5 respectively. In 1991 the consumption bundle of x and y was 4 x’s and 5 y’s. It is now 9 x’s and 7 y’s. Calculate the Laspeyres index of current prices relative to 1991 prices rounded to one decimal place. (Remember the Laspeyres index uses the old quantities for weights.)

0.5

2.4

2.5

2.2

None of the above.

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To calculate the Laspeyres index we use the formula text... View the full answer