Question 20N.3.HL.TZ0.b
| Date | November 2020 | Marks available | [Maximum mark: 4] | Reference code | 20N.3.HL.TZ0.b |
| Level | HL | Paper | 3 | Time zone | TZ0 |
| Command term | Explain | Question number | b | Adapted from | N/A |
Table 1 provides information required for the calculation of a consumer price index (CPI). It shows a typical basket of goods purchased by the citizens of Country Alpha and the prices of these goods for two consecutive years. Assume 2015 is the base year, when the cost of the typical basket was $45.00.
Explain two reasons why the calculation of the inflation rate may not be accurate.
[4]
There were many good responses which explained the biases which might render the calculated inflation rate inaccurate. Weaker responses stated but did not explain these factors or implied that the data collection might be inaccurate. Additionally, weaker responses stated that "many people buy in parallel/black markets" or referred to price volatility as a reason for inaccuracy.
