Your grandfather tells you that his Social Security payments are indexed. What does this mean?
A) It means that the dollar value of his Social Security payment is adjusted for changes in the price level so that his purchasing power is constant.
B) It means that the dollar value of his Social Security payments is adjusted for changes in the price level so that his purchasing power increases at the same rate as inflation.
C) It means that the value of his Social Security payments is not adjusted for changes in the price level so his purchasing power may fall.
D) It means that the real value of his Social Security payment is adjusted for changes in the price level so that its nominal value is constant.
Correct Answer:
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