Question

What is indexing?

Short answer

Indexing is related to the adjustments in various components.

Step-by-step solution

Step 1. Introduction

Indexing is important in economics because by the use of indexing we came to adjust and simplify huge data into informative data.

Step 2. Definition

Indexing is defined as the use of some standard indicator as a yardstick. In economics and finance, field indexing is the statistical estimate for tracing economic data like inflation, GDP, unemployment, market returns, and productivity.

Step 3. Example

For example, when we adjust the wages of employees according to their standard of living.