UNIT 7: Index numbers

Question 1

CPI

Answer 1

Consumer Price Index

DOESN’T includes mortgages.
Measures the rate of change of everyday items. Based on a basket of goods.
Essentially a geometric mean.
The government use it to set state benefits and pensions.
Base Year 2005

Question 2

RPI

Answer 2

Retail Price Index

DOES include mortgages.
Measures the rate of change of everyday items. Based on a basket of goods.
Essentially an arithmetic mean
The government use it to set student loan rates.
Base Year 1987

Question 3

GDP

Answer 3

Gross Domestic Product

Value of goods and services a country produces within a stated time period.
Services: Retail, Restaurants, Transport, Communications, financial services

Question 4

Recession

Answer 4

A country is said to be in recession if there is a fall in GDP for two (or more) successive quarters

Question 5

Index number formula

Answer 5

(price / base year price) × 100

Question 6

Weighted index number formula

Answer 6

(weighted mean / base year weighted mean) × 100

Question 7

Chain base index numbers

Answer 7

Compares prices from each year with the previous year. It is that year’s price as a percentage of the previous year’s price. It is written without a percentage sign.

Question 8

Chain base index numbers formula

Answer 8

(Price / last year’s price) × 100

Question 9

Crude birth/death rate

Answer 9

Crude birth/death rate is the number of births/deaths per thousand of population.

Question 10

Standard Population

Answer 10

The standard population is a hypothetical population of 1000 people, considered to represent the whole.

Question 11

Standard Population Formula

Answer 11

standard population =

(number in age group / total population) × 1000

Question 12

Standardised

rate

Answer 12

Standardised rate = (crude rate /1000) × standard population