CHAPTER 7

Question 1

what does an index number do?

Answer 1

• compare the price of an item with the base year price

Question 2

what does the base year price have an index of?

Answer 2

100

Question 3

index number equation:

Answer 3

index number= (price/ base year price ) x 100

Question 4

what does an index number greater than 100 show?

Answer 4

• an increase in value

Question 5

what does an index number less than 100 show?

Answer 5

• a decrease in value

Question 6

What does the RETAIL PRICE INDEX (RPI) show and include?

Answer 6

• shows the rate of change of prices in everyday life such as mortgage payments, food, heating and petrol
• the UK government uses the RPI to set interest rates for student loans

Question 7

what does the CONSUMER PRICE INDEX (CPI) show and include?

Answer 7

• shows the rate of price changes in everyday life, does not include mortgage payments
• state benefits and pensions in the UK are updated each year with the CPI

Question 8

what is the GROSS DOMESTIC PRODUCT (GDP)?

Answer 8

• the value of goods and services a country produces within a stated time period

Question 9

when is an economy in recession?

Answer 9

• when its GDP falls in two (or more) recessive quarters

Question 10

weighted index number equation:

Answer 10

(current weighted mean price/ base year weighted mean price) x 100

Question 11

what do chain base index numbers compare?

Answer 11

• compare prices from each year with the previous year

Question 12

chain base index number equation:

Answer 12

chain base index number= (price/ last year’s price) x 100

Question 13

what are the RPI and CPI?

Answer 13

• chain base index numbers which show annual or monthly percentage changes in price

Question 14

what is the crude birth rate?

Answer 14

• number of births per thousand of the population

Question 15

what is the crude death rate?

Answer 15

• number of deaths per thousand of the population

Question 16

crude birth/ death rate equation:

Answer 16

crude rate= (number of births/deaths/ total population) x 1000

Question 17

what is the standard population?

Answer 17

• hypothetical population of 1000 people, considered to represent the whole
• you can use it to make valid comparisons between populations with very different age profiles and sizes

Question 18

standard population formula:

Answer 18

standard population= (number in age group/ total population) x 1000

Question 19

what is a standardised rate of change?

Answer 19

uses the standard population to compare the same age group in different populations and allows realistic comparisons to be made

Question 20

standardised rate equation:

Answer 20

standardised rate= (crude rate/ 1000) x standard population