statistics - chapter 7: index numbers
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31 Terms
What are index numbers used for?
To compare price changes over time
What is a simple index number?
Compares the price of an item with its base year price
What is the base year index value?
100 (represents 100%)
What does an index number greater than 100 mean?
The value has increased
What does an index number less than 100 mean?
The value has decreased
What is the formula for index number?
Price ÷ Base Year Price × 100
What are chain base index numbers?
They compare each year’s price with the previous year
What happens to the base year in chain base index numbers?
It changes every year
What is the formula for chain base index numbers?
Price ÷ Last Year’s Price × 100
What do RPI and CPI measure?
Changes in prices monthly or annually
What is RPI?
Retail Price Index – measures inflation of everyday goods (e.g. food, housing)
How is RPI calculated?
Monthly, compared to the same month in the previous year
What is CPI?
Consumer Price Index – official UK measure of inflation
What is a key difference between CPI and RPI?
CPI excludes mortgage payments
Why is CPI weighted?
To reflect importance of different items in spending
What is GDP?
Total value of goods and services produced in a country
When is an economy in recession?
When GDP falls for 2 or more consecutive quarters
What are weighted index numbers?
They account for importance (weights) of different items
What is the formula for weighted index numbers?
Sum of (index number × weight) ÷ Sum of weights
What do crude rates measure?
How often something happens per 1000 people
Give examples of crude rates
Birth rate, death rate, marriage rate, unemployment
What is the formula for crude rate?
Number of events ÷ Total population × 1000
What is crude birth rate?
Number of births per 1000 people
What is crude death rate?
Number of deaths per 1000 people
Why can crude rates be misleading?
They ignore differences in age structure between populations
What is a standard population?
A hypothetical population (usually 1000 people) used for comparison
Why use a standard population?
To account for differences in age/gender/income
What is the formula for standard population?
Number in age group ÷ Total population × 1000
What is a standardised rate?
A rate adjusted using a standard population for fair comparisons
What is the formula for standardised rate?
Crude Rate ÷ 1000 × Standard Population
How do you find the total standardised rate?
Add up the rates for each group