The intent of indexing is to:
A)reduce inflation gradually.
B)shift the long-run Phillips curve to the right.
C)take most of the sting out of inflation.
D)raise tax revenue automatically during inflation.
E)do all of the above.

Question

Quizplus · Accepted Answer

Indexing is a policy tool used to adjust wages, prices, and taxes in line with inflation. The intent is to mitigate the negative effects of inflation by reducing the impact it has on people's real income and on the economy as a whole. So, option C is the correct choice as it best explains the primary intent of indexing. Option A and D are incorrect as indexing does not aim to reduce inflation or increase tax revenue but rather counterbalance its effects. Option B is also incorrect as shifting the long-run Phillips curve to the right is a result of reducing inflation, not something that indexing aims to do.

The Intent of Indexing Is To