inflation Flashcards
problems with using CPI as a inflation measure
- may not be accurate. only representing the average household
- dOESNT INCLUDE HOUSING! housing is a big spend!
- some goods fluctuate heavily in price e.g gas and food
HOW CPI IS CALCULATED
- survey is done
- weighted basket of goods
- look at price change
- updated anually
Define demand pull inflation
Inflation caused by excess demand in an economy
Define cost push inflation
Inflation caused by an increase in costs of production in an economy
Define CPI
A measure of the price level used by BOE to measure inflation against its target.
Define RPI
Alternate inflation measure but unlike CPI includes housing costs so therefore tends to be higher.
problems with using CPI as a inflation measure
- may not be accurate. only representing the average household
- dOESNT INCLUDE HOUSING! housing is a big spend!
- some goods fluctuate heavily in price e.g gas and food
problems with using CPI as a inflation measure
- may not be accurate. only representing the average household
- dOESNT INCLUDE HOUSING! housing is a big spend!
- some goods fluctuate heavily in price e.g gas and food
evaluation for CPI
problems with using CPI as a inflation measure
- may not be accurate. only representing the average household
- dOESNT INCLUDE HOUSING! housing is a big spend!
- some goods fluctuate heavily in price e.g gas and food
evaluation for inflation
-depends on severity
benefits of inflation(low n stable)
- can benefit workers(can demand higher wage)
- stable consumption ( increased confidence e.g in ppls houses)
problem with gdp per capita
remittences- people sending money back will improve their home countries family living standards,but not their ones here
gni is( not inflation topic)
total income generated by a countries FOP regardless of those FOPs locations
