F7 - Solution To Financial Problems

Question 1

What is Inflation

Answer 1

The rate of increase in prices for goods and services

Question 2

What is the retail price index (RPI) used for?

Answer 2

To track changes in prices of goods and commodities

Question 3

What is the common price index (CPI) used for?

Answer 3

To track changes in prices of commodities

Question 4

What is the difference been RPI and CPI?

Answer 4

RPI includes housing costs such as mortgage interest payments and council tax where as CPI doesn’t.
CPI usually lower as different formula as CPI takes into account people switch to cheaper products when prices rise.