[FudgeMonkey]

Teacher set us homework, one of the questions is as following:

What are the problems in determing inflation? (6 marks)

all i can think of is that the index has to be a fair reflection of the average Uk household, which is difficult to do. Any other idea? I am really stuck Thank you

[Faiz]

(Original post by FudgeMonkey)
Teacher set us homework, one of the questions is as following:

What are the problems in determing inflation? (6 marks)

all i can think of is that the index has to be a fair reflection of the average Uk household, which is difficult to do. Any other idea? I am really stuck Thank you

You might want to look at things like inflation can be imported from other countries, especially if the country imports a lot. Leading on from this, u could discuss the country's currency and how strong/weak it is against the countries it trades with. If it's currency is weak, it's imports are going to seem more expensive, which may give a sense of inflation, although it hasn't developed at home. I guess u could also talk abt ne major crises which may have occured, such as the OPEC crises of the 70's, where it maybe difficult to pin-point inflation exactly, as the priee of oil affects the price of almost nething. You also get different methods of measuring inflation (RPI, CPI etc.) and it can often be difficult to determine which is the most reliable.

There are many other things as well, but I think this should help for 6 marks