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:

Fixed Period

A set length of time during which certain activities or events are scheduled to occur or conditions are meant to remain unchanged.

Expected Value

The anticipated value or mean of a random variable, representing the center of its distribution.

Portfolio

A selection of monetary assets, covering equities, fixed-income securities, commodity holdings, liquid assets, and assets nearing cash, containing mutual funds and Exchange-Traded Funds.

Stocks

Shares representing ownership interests in corporations, allowing investors to claim on businesses' assets and earnings.