A-Level Economics: One Inflation Rate, Two Households

Students build a weighted price index from a small basket, calculate inflation, then compare a pensioner and a student household and judge whether one index protects pensioners.

What students do

• Match inflation, deflation and disinflation to their meanings
• Calculate price relatives and a weighted price index from a four-item basket
• In pairs, calculate the inflation rate for a pensioner and a student household and explain the difference
• Give limitations of the CPI and one difference from the RPI, then judge whether raising pensions by the CPI protects pensioners

What the teacher gets

• A lesson plan for about 55 minutes of tasks, with a shorter 45-minute version. Allow longer in the timetable for handing out and feedback
• Worked answers for every calculation, with common errors
• Indicative guidance for the written judgement. It is not an exam board mark scheme and carries no marks or grades
• Editable Word versions of both files, so you can change the basket or the weights

Specification

Edexcel A level Economics A (9EC0), Theme 2, section 2.1.2 Inflation: inflation, deflation and disinflation, calculating the rate of inflation with the CPI, the limitations of the CPI and the RPI as an alternative measure. Checked against the Pearson specification, Issue 2, October 2016. The country, the households and every figure are fictional, and the four-category index simplifies the real CPI. This is not a Pearson resource, and the lesson has not yet been tested in a classroom.