One main argument against indexing is that:
A)it can worsen inflation.
B)it can reduce asset prices.
C)it can reduce net exports.
D)it can lead to deflation.
E)it can lead to hyperinflation.

Question

Quizplus · Accepted Answer

Indexing can worsen inflation because it can create a self-fulfilling cycle. As prices rise, wages and other costs also increase, leading to further price increases, and the cycle continues. This can lead to an inflationary spiral, resulting in an overall increase in the cost of living.

One Main Argument Against Indexing Is That