Section A

Question 1

1(b) explain one likely impact of a decrease in the base interest rate on inflation

Answer 1

A decrease in rewards for savings
As it shows uks lowest interest rate from 0.75 to 0.1% in march 2020
Consumption will increase meaning ad and inflation rises

Question 2

2(a)Define the term nominal

Answer 2

Not adjusted for inflation

Question 3

3(b) explain the likely relationship between real incomes and subjective happiness

Answer 3

As real income increase, happiness increases.
As shown on the chart real incomes have been steady throughout this time period given
Higher earnings can increase an individuals ability to spend more on goods and services.

Question 4

4 (a) define the term exchange rate

Answer 4

The value of one currency in the terms of another

Question 5

5(b) explain one limitation of CPI measuring the rate of inflation

Answer 5

One limitation is that there are sampling problems
Fewer than 60% reply to the survey
Which may not provide accurate information