Inflation

Question 1

What are the two possible definitions of inflation

Answer 1

The rate of change in the average price level over time

OR

The sustained increase in the cost of living/ fall in the purchasing power of money.

Question 2

What are the two main measures for inflation

Answer 2

-The Consumer Price Index (CPI) - CPIH
-The Retail Prices Index (RPI)

Question 3

What is the preferred measure of inflation by the bank of england

Answer 3

-The preferred measure is the Consumer Prices Index