Weighted Price Index Calculation
Macroeconomic Objectives
AO4·HL
Syllabus requirement
Calculation of a weighted price index using a set of data (HL only).
Assessment objectives
AO4 Use of Appropriate Skills
Higher LevelThis topic is assessed at HL.
Summary
This topic explains how to calculate a weighted price index (such as a CPI) using given prices and quantities as weights, and how to derive an inflation rate from those indices. It is important for HL students because it tests quantitative AO4 skills: computing a weighted index, interpreting changes in the index as inflation or deflation, and understanding limitations of the CPI as a measure of the cost of living.
