Final answer:
The question pertains to calculating the total cost and inflation rate over a period using two different base years. By understanding the price indices and the inflation rates, one can determine how prices have changed over time and the impact on the buying power of money.
Step-by-step explanation:
The question appears to be about calculating the overall cost of purchases and the associated inflation rate, using principles of mathematics specifically within the realms of economics and arithmetic. The inflation rate can be determined by finding the percentage increase in the total cost of a basket of goods from one period to another. This calculation incorporates the concept that changes in the price of goods will affect the buying power of money differently depending on how much of each good is purchased and its price.
To illustrate, let's consider a hypothetical example based on the provided information. If the total price of purchasing a basket of goods in the United Kingdom over four years is £940 in year 1, £970 in year 2, £1000 in year 3, and £1070 in year 4.
To calculate price indices, we can use the given base years. For example, using year 1 as the base year and setting it equal to 100, we can calculate the index for each subsequent year. Thus, the index for year 4 would be (1070/940)×100 = 113.83.
The inflation rate from year 1 to year 4 based on this index would be (113.83 - 100) = 13.83%, which shows how much prices have increased over these four years. Similarly, one could calculate the index using year 4 as the base year and find the corresponding inflation rate for the previous years relative to year 4.