Tuesday, August 21, 2007

Unit 3: Inflation falls in the UK

July saw a surprise drop in UK inflation. THis BBC clip explains why the UK's rate of inflation fell below analysts' forecasts to 1.9% in July.
< http://www.bbc.co.uk/mediaselector/check/player/nol/newsid_6940000/newsid_6947000?redirect=6947089.stm&news=1&amp;bbram=1&bbwm=1&nbwm=1&nbram=1&asb=1 >

a) What are suggested as the reasons for the unexpected fall in inflation?
b) How do falls in the prices of these items lead to inflation (as measured by the CPI) decreasing?

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