A main argument against indexing is that:
A)it can worsen inflation.
B)it can reduce asset prices.
C)transaction costs are too high.
D)it could lead to deflation.

Question

A main argument against indexing is that:
A)​it can worsen inflation.
B)​it can reduce asset prices.
C)​transaction costs are too high.
D)​it could lead to deflation.

Quizplus · Accepted Answer

Indexing can worsen inflation as it involves adjusting prices or wages based on a chosen index, which may not accurately reflect the true costs or productivity levels. This can lead to a chain reaction of price increases and ultimately higher inflation.

A Main Argument Against Indexing Is That