Principles of Macroeconomics / Unit 6 MAC 0523 short lesson, about 20 seconds
Indexing
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The idea
Indexing means a payment adjusts automatically with the price level, so its real value holds. Tax brackets and social security payments are indexed.
In practice
An indexed bond pays a real return on top of whatever inflation turns out to be.
Where people slip
Indexing is always partial, so it protects some people and leaves others exposed, and it can weaken the will to fight inflation.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
Builds on
Unlocks
- Nothing yet depends on this.
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