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5
6/120×100.
Class 11 · English Medium · Cambridge · Economics
National income, prices and employment
Separate price levels, inflation rates and purchasing power.
Original Kidemy further-topic investigation. This optional lesson is shared by related upper pathways; select suitable depth with a teacher. It does not certify complete grade or board coverage.
Learn the idea
An index compares a selected basket with a reference period. Inflation is the percentage change of the index over a specified interval. Real purchasing power compares a money amount with prices. A smaller positive inflation rate still means a rising price level.
Worked example
An index100→110→115.5 rises10% then5%. A money income1000→1050 rises5%; against a 10% price rise, real purchasing power falls because1050/1.10≈954.55 in initial-price units.
- Name the period and basket.
- Use the original base.
- Explain purchasing power and one coverage limit.
Your written practice
Show your working on paper and enter your answer here. If it does not match, compare the model and try again.
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1200
1320/1.1.
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2
2/100×100.
Write in your own words. A guardian or teacher should review this response.
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The rate of increase may slow while remaining positive.
Distinguish level and change.
Write in your own words. A guardian or teacher should review this response.
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The household may buy a different mix of goods and face different prices.
Explain weighting and coverage.
Apply the idea
Write a four-sentence commentary on a fictional price and income table.
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- Use the stated evidence or givens.
- Show reasoning rather than only a result.
- Review and explain one correction.
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