Relevant to all

Question 1

what does WPIDEC stand for

Answer 1

weak pound imports dearer exports cheaper

Question 2

what does SPICED stand for

Answer 2

strong pounds imports cheaper exports dearer

Question 3

what are some evaluation points

Answer 3

-what state the economy is in
-does the cost outweigh the benefit
-impact on north vs south
-impact on London vs rest of uk
-impact on bigger vs smaller firms
-impact on people with higher vs lower incomes
-long term vs short term

Question 4

what is price confusion (evaluative point)

Answer 4

high and volatile inflation can distort the signalling function of prices. Consumers can’t distinguish between price increases caused by scarcity or those caused by inflation

Question 5

what is money illusion (evaluative point)

Answer 5

not purchasing a good, thinking it is overpriced forgetting the impact of inflation. consumers focus on the nominal price rather than the real price