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Unit 2 Managing the Economy-Measuring Inflation
What is inflation?

Inflation is a rise in the general price level in an economy sustained over time. General Price
level = average price level. `Sustained' means inflation is persistent.

What is deflation?

Deflation is the fall in the general price level in the…

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The Bank of England's target on inflation is 2% +/- 1%.

How do you measure the weighting of CPI?

% = (new price-original price) x100

Original price

What are the limitations of the CPI measure?

1. Maybe too many rich households are included in the sample of 7,000 samples; this…




This is a good brief guide to calculating inflation. It is good for revising calculating CPI.

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