Retail Price Index and Inflation
- Created by: Imogenbn99
- Created on: 22-11-15 08:43
View mindmap
- The Retail Price Index and Inflation
- Inflation = An increase in GENERAL price level
- Measured by: (The sum of the index in year x / The sum of the index in the base year) X100
- In a period of inflation, money is the least desirable store of wealth because the value decreases.
- People who borrow (debtors) benefit from inflation
- The value of the repayment will have fallen
- Balance of Payments = worse
- Exports become more expensive for other countries -> less demand
- Imports are relatively cheaper so demand increases
- The Retail Price Index
- Base year = 100
- Another year is compared
- Measures changes in the average basket of goods bought by a typical family
- Weighting makes it possible to take account of the relative importance of spending on different items when measuring average price changes
- Used to be used in the UK
- Base year = 100
- Inflation = An increase in GENERAL price level
Comments
No comments have yet been made