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Indexation is a method that use can be associated with which of the following?
- a)Measurement of savings rate
- b)Fixing of wage compensation
- c)Nominal GDP estimation
- d)Adjust for the effects of inflation
Correct answer is option 'D'. Can you explain this answer?
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Most Upvoted Answer
Indexation is a method that use can be associated with which of the fo...
- Indexation means adjusting a price, wage, or other value based on the changes in another price or composite indicator of prices.
- Indexation can be done to adjust for the effects of inflation, cost of living, or input prices over time, or to adjust for different prices and costs in different geographic areas.
- Indexation is often used to escalate wages in inflationary environments where failure to negotiate regular wage increases would lead to ongoing real wage cuts for workers.
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Community Answer
Indexation is a method that use can be associated with which of the fo...
Indexation is a method that can be associated with adjusting for the effects of inflation.
Explanation:
Indexation is a technique used to adjust the value of a variable or asset to account for changes in the general price level or inflation. It is commonly used in economics and finance to ensure that the value of a specific variable or asset remains constant in real terms, even as inflation erodes its purchasing power.
Adjusting for the effects of inflation:
One of the primary purposes of indexation is to adjust for the effects of inflation. Inflation refers to the general increase in prices over time, which reduces the purchasing power of money. When prices rise, the value of money decreases, and individuals are not able to buy the same amount of goods and services with the same amount of money.
Measurement of savings rate:
Indexation is not directly associated with the measurement of savings rate. The savings rate is typically calculated as the percentage of disposable income that is saved by individuals or households. It is a measure of how much money is being saved rather than spent. Indexation does not play a role in this calculation.
Fixing of wage compensation:
Indexation is not directly associated with the fixing of wage compensation. Wage compensation refers to the amount of money paid to employees in exchange for their work. The fixing of wage compensation is determined by various factors such as labor market conditions, supply and demand, and bargaining power. Indexation does not have a direct impact on this process.
Nominal GDP estimation:
Indexation is not directly associated with the estimation of nominal GDP. Nominal GDP is a measure of the total value of goods and services produced in an economy during a specific period, without adjusting for inflation. It is calculated by using current market prices. Indexation, on the other hand, is used to adjust for inflation and convert nominal values into real values.
In conclusion, indexation is a method that is primarily associated with adjusting for the effects of inflation. It helps to maintain the real value of a variable or asset over time by accounting for changes in the general price level. Indexation is not directly related to the measurement of savings rate, fixing of wage compensation, or nominal GDP estimation.
Explanation:
Indexation is a technique used to adjust the value of a variable or asset to account for changes in the general price level or inflation. It is commonly used in economics and finance to ensure that the value of a specific variable or asset remains constant in real terms, even as inflation erodes its purchasing power.
Adjusting for the effects of inflation:
One of the primary purposes of indexation is to adjust for the effects of inflation. Inflation refers to the general increase in prices over time, which reduces the purchasing power of money. When prices rise, the value of money decreases, and individuals are not able to buy the same amount of goods and services with the same amount of money.
Measurement of savings rate:
Indexation is not directly associated with the measurement of savings rate. The savings rate is typically calculated as the percentage of disposable income that is saved by individuals or households. It is a measure of how much money is being saved rather than spent. Indexation does not play a role in this calculation.
Fixing of wage compensation:
Indexation is not directly associated with the fixing of wage compensation. Wage compensation refers to the amount of money paid to employees in exchange for their work. The fixing of wage compensation is determined by various factors such as labor market conditions, supply and demand, and bargaining power. Indexation does not have a direct impact on this process.
Nominal GDP estimation:
Indexation is not directly associated with the estimation of nominal GDP. Nominal GDP is a measure of the total value of goods and services produced in an economy during a specific period, without adjusting for inflation. It is calculated by using current market prices. Indexation, on the other hand, is used to adjust for inflation and convert nominal values into real values.
In conclusion, indexation is a method that is primarily associated with adjusting for the effects of inflation. It helps to maintain the real value of a variable or asset over time by accounting for changes in the general price level. Indexation is not directly related to the measurement of savings rate, fixing of wage compensation, or nominal GDP estimation.
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Indexation is a method that use can be associated with which of the following?a)Measurement of savings rateb)Fixing of wage compensationc)Nominal GDP estimationd)Adjust for the effects of inflationCorrect answer is option 'D'. Can you explain this answer?
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