When the value of a payment is adjusted in proportion to changes in the CPI,economists refer to that as
A) nominalization
B) realization
C) indexation
D) stabilization
E) depreciation

Question

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When the value of a payment is adjusted in proportion to changes in the CPI, it is referred to as indexation. This ensures that the payment retains its purchasing power even in times of inflation. Nominalization refers to the process of converting a value from real terms to nominal terms. Realization refers to the process of converting an asset or investment into cash. Stabilization refers to the process of stabilizing an economy or a financial system. Depreciation refers to the decrease in value of an asset over time. None of these concepts apply to the given scenario.

When the Value of a Payment Is Adjusted in Proportion