Question

Name several forms of indexing in the private and

public sector.

Short answer

There are various forms of indexing, which include public and private.

Step-by-step solution

Step 1. 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.

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

Step 2. Explanation

Public sector indexing forms:

1. Social security payments: Social security payments are social security benefits that give partial substitute income to retirees, disabled, survivors, spouses, or children.

2. Tax brackets: tax brackets for different groups of people like the middle class, corporates, etc. is also a form of public sector indexing by which we group people in various brackets of tax. of tax.

Step 3.

Private sector indexing forms:

1. COLA (cost of living adjustment): COLA is defined as an increase in income that is bound to some count of economic activity and continues with the cost of living. It is normally related to salaries wages and benefits related to union agreements, executive contracts, and retirement benefits.

2. ARM (adjustable-rate mortgage): ARM is basically a home loan with an irregular/changeable rate of interest. In ARM, the interest rate is fixed in the initial period of time but after that, the rate on outstanding balance keeps on changing or resettled like quarterly or half-yearly, or annually.