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Quiz

Quiz. What is Inflation? How does inflation impact on people? What is the difference between deflation and disinflation? Real values and nominal values show different stances on statistical data in relation to inflation explain.

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Quiz

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  1. Quiz • What is Inflation? • How does inflation impact on people? • What is the difference between deflation and disinflation? • Real values and nominal values show different stances on statistical data in relation to inflation explain. • Calculate the inflation rate if the CPI was 1000 and it rose to 1111. Remember difference over original x 100.

  2. Calculations and types of inflation

  3. Consumer Price index • Main measurement for inflation in NZ • Monitors 700 goods used by an average household. • Prices are monitored around the country in urban areas. • Some goods have a greater importance and have a weighting that gives them greater relevance e.g. food is more important than apparel (clothes/shoes)

  4. The consumer price index monitors prices in Groups and Subgroups • Food group- (Fruit/vegetables)(Meat, Fish and Poultry) (Grocery food, Soft drink and Confectionery)(Restaurant and Ready2eat food) • Housing group- (Rented dwellings) (Home ownership) • Household operation – (Energy) (Appliances and furnishings)(Supplies and Services) • Apparel group – (Clothing) (Footwear)

  5. Groups and Subgroups • Transportation- (public transport) (private transport) • Tobacco and alcohol group – (cigarettes and tobacco) ( alcoholic drinks) • Personal and Health care group – (personal goods and services) (Health care) • Recreation and education – (Stationery, books, magazines and newspapers) (Leisure and recreation) (Education and Child Care)

  6. Limitations of CPI • Rural prices can be more due to isolation and costs of transporting goods there. • 700 goods are updated with trends every three years (e.g. Hummus loaded into CPI a few years ago with Dips and Shoe nugget was removed, IPhone/ IPad / ebooks are new additions last year). • The purchases of an average household do not apply to every household in NZ so the inflation rate may not be accurate for some households. • Producers use the Producer Price index as it is more useful for understanding prices in raw materials.

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