While interviewing our department's chair candidate, there was a brief debate on the real price of oil in the future between two faculty members. They gave two different forecast about the change of real oil price. One professor forecasted that real price of oil will increase, while the other forecasted the opposite. This is very important issue in my field. I suggested a discussion to other students, and will post the discussion here.
- Real price: Inflation adjusted price.
"Money price is the price quoted in money while relative or real price is the exchange ratio between real goods regardless of money (from Wikipedia.org)."
- CPI: Consumer Price Index. Government officially calculate it from some commodities, which do not include food and energy. In general, it is used as inflation rate.