F7 - Solution To Financial Problems Flashcards
1
Q
What is Inflation
A
The rate of increase in prices for goods and services
2
Q
What is the retail price index (RPI) used for?
A
To track changes in prices of goods and commodities
3
Q
What is the common price index (CPI) used for?
A
To track changes in prices of commodities
4
Q
What is the difference been RPI and CPI?
A
RPI includes housing costs such as mortgage interest payments and council tax where as CPI doesn’t.
CPI usually lower as different formula as CPI takes into account people switch to cheaper products when prices rise.
