Paper 2 · November 2016 · inflation

State the term for the weighted index number that measures the average change over time in the prices of a representative basket of goods and services bought by a typical household.

Model answer

consumer price index

Also accepted: cpi, the consumer price index

Explanation

Each item in the basket is weighted by its share of household spending, and the index is expressed against a base year taken as 100. The percentage change in the index between two periods is the rate of inflation over that period.

Derived from ZIMSEC Economics 9158/2 Paper 2, November 2016, Q2

View this paper's sittings and topics→

More questions from this paper

Annual inflation fell from 46,6% in December 1998 to 44,2% in January 1999 even though prices rose by 3,8% during January itself. The best explanation is
Income elasticity of demand measures the responsiveness of quantity demanded of a good to a change in
In a UK survey of income elasticities (1998-2000), liquid whole milk had an income elasticity of demand of -0.17, while fish had an income elasticity of demand of +0.27. Based on these figures, liquid whole milk is classified as
A survey found food overall has an income elasticity of demand of +0.20: a 10 percent rise in income raises the quantity of food demanded by only about 2 percent. As household income grows over time, this low income elasticity means that spending on food as a proportion of total household expenditure will
An inferior good is one with a negative income elasticity of demand: quantity demanded falls as income rises. When the price of such an inferior good falls, the substitution effect alone (real income held constant) causes quantity demanded of that good to

Get the full paper, not just one question

Danho has every sitting for this paper, with your progress tracked question by question, offline.

Get it on Google Play Download on the App Store