1. Consider Table 2.3 below which contains the information of an economy where only
pistachios and video games are produced.
Table 2.3: National Income Accounting
2021 2022
Quantity of pistachios 1,000 1,100
Quantity of video games 500 500
Price of pistachios $1.00 $1.50
Price of video games $15.00 $14.75
a) Using the Pasche index, calculate inflation between 2020 and 2021.
b) Using the Pasche index, calculate the percent change in real GDP from 2020 to 2021.
c) Explain in no more than 5 lines why CPI inflation can be different from GPD inflation?