Asked by Academic Research on Jul 31, 2024
Verified
A COLA is based on the Consumer Price Index.
COLA
Cost-of-Living Adjustment; an increase in income or benefits designed to offset inflation and maintain purchasing power.
Consumer Price Index
A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, used to estimate inflation.
- Understand how inflation adjustments (COLAs) are applied to benefits like Social Security.
Verified Answer
EH
Elias HerreraAug 05, 2024
Final Answer :
True
Explanation :
A COLA (Cost of Living Adjustment) is based on the Consumer Price Index (CPI) which measures the average change over time in the prices paid by consumers for a basket of goods and services. The CPI is used to calculate the inflation rate, which is a key factor in determining the COLA.
Learning Objectives
- Understand how inflation adjustments (COLAs) are applied to benefits like Social Security.