Question

5 Automatic cost-of-living adjustments (COLAs) to wages or pension payments are done through a process known a: (Click to select) transformation deflation indexing automation

Answer 1

Correct answer: Indexing Reason: Cost of living refers to the cost incurred in the maintenance of a certain living standard in an economy. Over time, a change in the cost of living is measured through cost of living index which measures the relative cost of living over time or regions. The adjustments in social security, pension benefits, and employment contracts can be made through the cost of living index. The cost of living adjustments (COLA) adjusts wages and salaries through indexing to counter the inflation effects. In general, the adjustments are equal to the percentage increase in CPI (consumer price index) for urban wage workers and clerical workers for a particular period.