When Something Is Indexed

question 118

Multiple Choice

When something is indexed:

• A) its value is automatically adjusted in proportion to the cost of living.
• B) it is expressed as nominal value multiplied by price index.
• C) its real value is converted into nominal terms for comparison.
• D) its relative rank in consumption items is compensated for relative to its cost.

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Definitions:

Negative Externalities

Costs suffered by a third party due to an economic transaction that they were not a part of.

Coase Theorem

A principle that asserts that if property rights are well-defined and transaction costs are negligible, parties will negotiate to correct externalities and allocate resources efficiently.

Private Market

A private market is a part of the financial market in which investments are negotiated directly between parties, without public market listing.

Externalities

Unintended outcomes from business transactions impacting external groups, not included in the product or service pricing.