Constant market prices: Constant market prices are adjusted for inflation so that they remain fixed over time. They allow economists to compare values across different years without being influenced by changes in prices.
Price index: A price index is a measurement of the average price level of a basket of goods and services relative to a base year. It helps track changes in prices over time and is crucial for calculating real GDP.
Inflation: Inflation refers to the general increase in prices for goods and services over time, leading to a decrease in purchasing power. It affects the value of money and can impact economic decisions made by individuals and businesses.