A student receives a monthly allowance. The allowance and the change in prices over the next year are shown below.
| Information | Amount or rate |
|---|---|
| Monthly allowance at the start of the year | £120 |
| Increase in the allowance over the year | 2% |
| Inflation over the year | 5% |
Calculate the monthly allowance after its increase and the approximate percentage change in its real value. Explain what this means for what the allowance can buy.
62 exam-style questions on OCR GCSE Economics 3.4 Price stability, covering 3.4.1 Price stability and inflation, 3.4.2 Measuring inflation with CPI, 3.4.3 Calculate the effect of inflation, 3.4.4 Analyse inflation figures, and 3.4.5 Causes and consequences of inflation. Each one has a worked solution and a mark scheme showing where the marks go.