Unit 2

Question 0

Defining nominal inflation

Answer 0

Nominal information is the actual price from a given point in time it’s not adjusted for inflation

Question 1

Define inflation

Answer 1

Sustained rise in the general price level

Question 2

Define real inflation

Answer 2

Real inflation prices adjusted for inflation is a constant prices

Question 3

What is RPI

Answer 3

The real price index measures the average change in price of a representative sample of over 600 goods and services

Question 4

Problems of RPI

Answer 4

Measures changes in retail price experienced by the average family however different families will have different patterns of consumption

Question 5

What does RPI X excluded

Answer 5

Mortgage interest repayments this is because when interest rates are increased to control aggregate demand and inflation the immediate effect is to increase mortgage interest repayments and therefore housing costs

Question 6

What is rpiy inflation

Answer 6

Is the call rate of inflation excludes indirect taxes and council tax on the inflation rate

Question 7

What is the CPI target

Answer 7

2% + -1%

Question 8

What is in the CPI measure

Answer 8

The CPI measure is similar to RPIX however housing costs are given less weight into CPI

Question 9

What are the two measurements of unemployment

Answer 9

The claimant account and the I LO

Question 10

What is the claimant account

Answer 10

The claimant account measures all those people who are out of work and you’re eligible to claim benefits it is a monthly measure

Question 11

What is the I LO

Answer 11

This measure of unemployment is Drawn from research into unemployment called the LFS it is a quarterly survey based on a random sample 60,000 households across the UK

Question 12

What are the two characteristics of unemployment

Answer 12

1. are available for work

2. have looked for work in the past 4 weeks

Question 13

Criticisms of the ILO

Answer 13

It is costly and takes time to compile and publish therefore it is out of date before publication. it does not include part-time workers who actively seeking full-time work. does not include those who are out of work and are not actively seeking work but are receiving benefits and will take a job is offered to them

Question 14

Criticisms of the claimant count

Answer 14

Excludes females and males in the 50s or 60s who may collect a pension

Question 15

What is on the current account

Answer 15

Visibles
invisibles
Net investment income
Net transfers

Question 16

What is on the financial account

Answer 16

Long or short term investments
e.g. hot money which is short term
and FDI which is long term