Indexation is a method that is commonly used to control inflation. It is a process through which certain values or quantities are adjusted periodically based on changes in a specific index, such as the consumer price index (CPI). By linking these values to an index, they are automatically adjusted to reflect changes in inflation, ensuring that their real purchasing power remains constant over time.

Option 1, "Controlling inflation," correctly identifies the use of indexation. When inflation increases, prices of goods and services rise, leading to a decrease in the value of money. Indexation helps to combat the negative effects of inflation by adjusting wages, pensions, or other financial values to maintain their real value. This helps individuals and businesses cope with rising prices and ensures that their incomes and investments are not eroded by inflation.

Option 2, "Nominal GDP estimation," is not directly associated with indexation. Nominal GDP refers to the total value of goods and services produced in an economy, without adjusting for inflation. While indexation may indirectly affect GDP by influencing inflation rates, it does not directly play a role in estimating nominal GDP.

Option 3, "Measurement of savings rate," is also not directly associated with indexation. The measurement of savings rates typically involves analyzing the amount of income saved