Summary Economics Edexcel - 2.1 Flashcards - Inflation

Inflation

What is meant by inflation ?
What is meant by deflation ?
What is meant by disinflation ?




QUESTION




Inflation: a sustained rise in the average price level over time.



Deflation: a sustained fall in the average price level over time.



Disinflation: a fall in the rate at which the general price is rising.




ANSWER

, CPI - consumer price
index
What is the CPI?
What is the CPI used for?
What is the CPI represented as ?
What is the base year?
How to calculate percentage change?


QUESTION


CPI: is the weighted average of items on which people spend their money.



The rate of inflation is measured by the UK by changes in the CPI.
• It is also used to make international comparisons of the rate of inflation.


The CPI is an index number. This means it is a number shown as a percentage relative to the
base year.
The base year is given the value 100.

The percentage change is the CPI between the two years is inflation rate.
Percentage change = (new - old)
Old




ANSWER