- Suppose people consume 3 different goods. The following table shows the prices and quantities of each good consumed in 2019, 2020, and 2021.
| Year | Price of Pizza | Quantity of Pizza | Price of Burger | Quantity of Burger | Price of coffee | Quantity of Coffee |
| 2019 | $ 8 | 350 | $ 10 | 200 | $ 8 | 150 |
| 2020 | $ 10 | 500 | $ 12 | 250 | $ 10 | 250 |
| 2021 | $ 13 | 700 | $ 14 | 400 | $ 15 | 400 |
- Calculate nominal GDP in each of the three years. (2 Marks)
- Calculate Real GDP in each of the three years, using 2019 as the base year. (2 Marks)
- Calculate the rate of inflation for 2020 and 2021 using the GDP deflator as your price index. Assume that 2019 is still the base year. (2 Marks)
- Using the quantities from 2019 for your market basket, and 2019 as your base year, calculate the CPI for 2019, 2020 and 2021. (2 Marks)
- Using the CPI calculate the rate of inflation. (2 Mark)