Price Index and Real Interest Rate
Price Index
Measure of average price changes in a specific set of goods and services
Nominal Interest Rate
Interest rate stated on a loan contract
Depreciation
Decrease in value of an asset over time
Real Interest Rate
Difference between the nominal interest rate and the inflation rate
Producer Price Index (PPI)
Price index that focuses on price changes for producers
GDP Deflator
Price index that measures changes in prices of all goods and services included in GDP
Consumer Price Index (CPI)
Price index that tracks price changes in housing, food, and apparel
Inflation Rate
Rate at which general level of prices for goods and services is rising
Frictional Inflation Rate
Rate of inflation caused by factors such as supply chain disruptions or labor market inefficiencies
Structural Inflation Rate
Rate of inflation caused by long-term changes in the structure of an economy
Base Year
Reference year used for comparison in a price index
Gross Domestic Product (GDP)
Total value of goods and services produced within a country