1. To maintain purchasing power: Indexation adjusts wages, pensions, and other benefits to keep up with the rate of inflation. This ensures that individuals maintain their standard of living even as prices rise.
2. To promote stability: Indexation can help prevent large fluctuations in income and prices, thus promoting economic stability.
3. To reduce poverty: By adjusting income levels and social benefits in line with inflation, indexation can help protect vulnerable populations from falling into poverty.
4. To promote fairness: Indexation can help ensure that individuals are not disadvantaged by inflation-related changes in income or prices.
5. To stimulate economic growth: By maintaining purchasing power and providing greater stability, indexation can help support consumer spending and overall economic growth.
6. To build trust and credibility: Implementing indexation policies can help demonstrate a government's commitment to protecting the financial well-being of its citizens and can enhance its credibility in the eyes of the public.
Why would a government implemented indexation as its policy
1 answer
1 answer