Answer to Question #95345 in Economics for Hayman

Question

To see what is going on, economists often “adjust” the data to reflect changes in the economy. For instance, in the text, we discussed the adjustments in dollar amounts made to correct for inflation. Another adjustment that is frequently made is to take into account the increase in population. What adjustments might you make in looking at education expenditures? At Social Security expenditures?

Answer 1

For income tax purposes and Social Security expenditures, the original cost or other original basis adjusted for such things as casualty losses, improvements, and depreciation, when appropriate. Education expenditures can be also adjusted depending on popularity of profession, the demand and supply for labor etc.