indexation

Vocabulary Word

Definition

'Indexation' is adjusting monetary amounts (like salaries or taxes) by the rate of inflation, which makes things fair when cost of things changes.

Examples in Different Contexts

In financial technology, 'indexation' mechanisms are implemented to create adaptive financial tools. A fintech developer might state, 'Our platform employs advanced indexation techniques to adjust investment values, ensuring optimal performance in varying economic conditions.'

Practice Scenarios

Business

Scenario:

When engaging in long-term financial planning, we need to consider how inflation might affect our investment return.

Response:

Absolutely. The indexation of returns is crucial to guard against inflationary loss.

Economics

Scenario:

Addressing the issue of tax burden, bracket creep is becoming an increasing concern for mid-income families.

Response:

Right! Introducing indexation in our tax system can be a fair way to overcome the bracket creep problem.