what does an index number do?
- compare the price of an item with the base year price
what does the base year price have an index of?
100
index number equation:
index number= (price/ base year price ) x 100
what does an index number greater than 100 show?
- an increase in value
what does an index number less than 100 show?
- a decrease in value
What does the RETAIL PRICE INDEX (RPI) show and include?
- 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
what does the CONSUMER PRICE INDEX (CPI) show and include?
- 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
what is the GROSS DOMESTIC PRODUCT (GDP)?
- the value of goods and services a country produces within a stated time period
when is an economy in recession?
- when its GDP falls in two (or more) recessive quarters
weighted index number equation:
(current weighted mean price/ base year weighted mean price) x 100
what do chain base index numbers compare?
- compare prices from each year with the previous year
chain base index number equation:
chain base index number= (price/ last year’s price) x 100
what are the RPI and CPI?
- chain base index numbers which show annual or monthly percentage changes in price
what is the crude birth rate?
- number of births per thousand of the population
what is the crude death rate?
- number of deaths per thousand of the population
crude birth/ death rate equation:
crude rate= (number of births/deaths/ total population) x 1000
what is the standard population?
- 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
standard population formula:
standard population= (number in age group/ total population) x 1000
what is a standardised rate of change?
uses the standard population to compare the same age group in different populations and allows realistic comparisons to be made
standardised rate equation:
standardised rate= (crude rate/ 1000) x standard population
