hi,

iam having trouble understanding the inflation index and its problems, can somebody tell me what is the inflation index and how to calculate it???

thanks.

# infation index, numerical reasoning test

**Mansman**#1

**ucayman**#2

hi ahmed,

have you checked out the [[numerical reasoning]] wiki page? It has links to two practice tests, created by the wikijob guys (i think).

The first four questions of [[Numerical Practice Test 1]] are inflation index based, and once you have completed the whole test it will give you the answers. Importantly it also shows you the workings, so you can see how to do it in future.

Quite useful as practice is key. Also have a look at the SHL website where you can register to do practice tests (which I believe are pilot tests in development).Those inflation index ones were a bit tricky the first couple of times I came across them, but I have done so many of the tests that they are not an issue.

Ucayman.

**mancmackem**#3

Easy way round it; if a question asks you to rebase at year 2004 for the answer to year 2008, Use this formula: y2008/y2004*100.

**stanik**#4

Hello!

Could some kindly help with with the following questions? Pls provide also how to proceed!!!

Morningside Limited - Number of Staff Employed by Department

```
Year 1 Year 2 Year 3 Year 4
```

Admin 22 28 26 18

Factory 314 483 350 383

Sales 63 99 83 73

Distribution 111 120 130 113

Other 98 64 43 75

Total 608 794 632 662

Question: If it costs £20,000 for admin and sales staff, and £14,000 for the remaining staff, by what percentage did the wage bill change between year 2 and year 3?

Answers:

75%

25%

20%

21%

**stanik**#5

You should image that the following is a table. Since I coudn’t show this as a table consider the single parts (YEAR;GDP;USD EXCHANGE;INFLATION INDEX) as a columns :-)) I hope you’ll be able to assamble this.

UK GDP

Year

1980

1985

1990

1995

2000

2005

Gross domestic product/$m

230,695

354,952

557,300

718,383

953,576

1,209,334

US dollar exchange

£0.42

£0.77

£0.56

£0.63

£0.65

£0.54

Inflation index(2000=100)

43

60

76

92

100

107

Question: What was the GDP/million of the UK in 2005?

Answers

£1,209,334

£653,040

£610,318

£698,753

THANK YOU

**cjburke.01**#6

Hi everyone,

I’m also finding the inflation questions really difficult!! Can someone help me with the following question from numerical test 1 (using the info in the question from stanik, above):

What was the increase in GDP/million from 1980 to 2005 in real terms?

The answer is $ 593,719. After a week of trying to answer it (and giving myself a massive headache) I am still no closer than when I first started.

Any help will be greatly appreciated!!!

P.s. If anyone also knows of any books/ websites where I could learn and practise more of the index questions, please let me know…

Thanks!!

**cjburke.01**#7

Hi Stanik,

The answer for the morning side question is 20%. Here’s how:

For Yr 2:

The total of admin and sales staff for yr 2 is 127. The cost for each staff member is £20,000, therefore total cost for admin sales for yr2 is £2,540,000 (127*20k)

The remaining staff (794-127) cost £14,000 per person. Therefore for the remaining staff, the cost is £9,338,000 (667*14k)

Total Cost for Yr 2= 2,540,000 + 9,338,00= £11,878,000

For Yr3

A&S staff cost= 109*£20,000=£2,180,000

Remaining staff cost= (632-109)*14,000= £7,322,000

Total cost for Yr3= 2,180,000 + 7,322,000= £9,502,000

Therefore change in wage bill: ((9,502,000- 11,878,000)/11,878,000 ) *100= -20%

Hope this helps!

**messierchippy**#10

Hey cjburke.01,

Thanks for your help.

I think it was confusing because whoever wrote this didn’t write it correctly.

```
If it costs £20,000 for admin and sales staff, and £14,000 for the remaining staff, by what percentage did the wage bill change between year 2 and year 3?
If it costs £20,000 for EACH admin and sales staff, and £14,000 for the EACH remaining staff, by what percentage did the wage bill change between year 2 and
year 3?
You could read the original question is costing £20,000 for the ENTIRE admin and sales staff and £14,000 for the ENTIRE remaining staff in year 2. Then, you
would have to do all this nonsense to see how much each person costs in year 2.
```

Thanks for helping clarify what these stupid test makers can’t appropriately say.

Cheers,

messierchippy

**C45F**#11

A garage discovered that 1/2 of their customers bought french cars, 1/3 german cars and 1/6 (20) american cars. how many customers did the garage have?

I don’t require an answer but was hoping if anyone knew where i could find more questions of this type, using fractions in questions?

Thanks in advance!!!

**Yelenka**#14

Year…GDP($m)…USD/GBP…CPI…Deflated_GDP($m)

1980…230,695…£0.42…43…536,500

1985…354,952…£0.77…60

1990…557,300…£0.56…76

1995…718,383…£0.63…92

2000…953,576…£0.65…100

2005…1,209,334…£0.54…107…1,130,218

Real GDP is inflation-adjusted nominal GDP.

Use CPI to deflate GDP for 1980 and 2005 using formula: (NomGDP/CPI)x100.

Real GDP was increased by 1,130,218-536,500=593,718($m) as required.

**Yelenka**#15

## Year…GDP($m)…USD/GBP…CPI…Deflated_GDP($m)

1980…230,695…£0.42…43…536,500

1985…354,952…£0.77…60

1990…557,300…£0.56…76

1995…718,383…£0.63…92

2000…953,576…£0.65…100

2005…1,209,334…£0.54…107…1,130,218

Real GDP is inflation-adjusted nominal GDP.

Use CPI to deflate GDP for 1980 and 2005 using formula: (NomGDP/CPI)x100.

Real GDP was increased by 1,130,218-536,500=593,718($m) as required.

**santanasbananas**#16

Can anyone please help me with the cost of living question…?

Question:

Which period saw the greatest decrease in water prices?

According to the feed-back it is calculated like this

Calculate each year’s percentage water price decrease to determine which year had the greatest drop.

To do this:

y0-y1 1-(100/95)=-5.3%

y1-y2 1-(95/90)=-5.6%

y2-y3 1-(90/85)=-5.8%

y2-y3 had the greatest decrease.

(The Inflation rates for the different years are: y0: 100 y1: 95 y2: 90 y3: 85)

My initial calculation for y0-y1 was (100-95)/100= 5%

But as you can see… they are calculating the decrease 5/95 instead. I don’t understand why they are using y1 inflation instead of y0?

**jimmy_whiteman**#17

anyone has experience with graduatemonkey? Is it any good? I saw package prices start from £19, is it worth the money?

thanks in advance!

Jim