Question

As the costs of goods and services go up over time, the government raises the benefit levels for Social Security recipients to account for so-called cost-of-living adjustments. This is an example of what concept?

Answer 1

The correct answer would be, Indexing.

As the costs of goods and services go up over time, the government raises the benefit levels for Social Security recipients to account for so called cost of living adjustments. This is an example of Indexing.

Explanation:

Indexing is basically a process in which the index is compiled.

Social Security is the tax that is deducted from the payroll of employees. Employees pay a specific amount of their payrolls to the tax fund until they are employed or are working fine without any disability. In case of retirement, unemployment or any type of disability, this pool of funds provide help to the people. It means benefits are given to the employees.

So with the increase in the costs of goods and services, government also raises the benefits for the employees from the social security. This process is called Indexing. In this process, if we calculate it wisely, the benefits remain the same as they were at the start of the social security program in accordance with the costs of goods and services.

Learn more about Social Security at:

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