test corrections for new test

Question 1

cost of living

Answer 1

amount of money needed to cover basic expenses such as housing, food, taxes and healthcare in a certain place and time period

Question 2

standard of living

Answer 2

measure of the material aspects of a national or regional economy
it counts the amount of goods and services produced and available for purchase by a person, family, group or nation

Question 3

relationship between cost of living and standard of living

Answer 3

cost of living is the cost of maintaining a certain standard of living
measures of quality of life include standard of living indices but also include non-materialistic characteristics such as relationships, freedom, satsifaction

Question 4

inflation

Answer 4

steady and persistent increase in the general level of prices from one time period to the next, usually a year
it is the rate at which your money loses the ability to buy goods/services

Question 5

how to calculate CPI

Answer 5

choose a rep base year and let all prices =100
choose another year to compare against
list of goods/services from household b.s.
find price of each good
attach a weight to each price by x
this is a simple price index
add all to form CPI

Question 6

limitations of CPI

Answer 6

lags behind consumer trends
doesnt account for changes in quality
an index of average consumer

Question 7

advantages of regulation in the banking sector

Answer 7

protects consumer
ensures proper lending policies
less need for gov/eu intervention
improve economic stability/confidence

Question 8

government intervention in creating employment

Answer 8

frictional- invest in entrepreneurial state bodies to encourage new business ideas
cyclical- subsidise additional labour by offering tax breaks on new employees