Which Statement Best Defines "Indexation

question 48

Multiple Choice

Which statement best defines "indexation"?

• A) It is a process of adjusting the nominal interest rate so that it is equal to the real interest rate.
• B) It is the use of a law or contract to automatically correct a dollar amount for the effects of inflation.
• C) It is the use of a price index to deflate dollar values.
• D) It is an adjustment made by Statistics Canada to the CPI so that the index is in line with the GDP deflator.

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Definitions:

Consumer Goods

Products that are purchased for consumption by the average consumer.

Production Possibilities Curve

A graphical representation that shows the maximum possible output combinations of two goods or services an economy can achieve when all resources are used efficiently.

Available Resources

The tangible and intangible assets that can be used or mobilized to achieve specific objectives or to produce goods and services.

Production Possibilities Curve

A graphical representation showing the maximum number of goods or services that can be produced with a fixed amount of resources.