Economy

What is readjustment? »Its definition and meaning

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In the field of finance and public economy, it is called "readjustment" to all those corrections that are made to a current currency, in order to restore the purchasing power that it had in its beginnings. In other meanings, it can be defined as simply the action and effect of "readjustment", that process in which an object, which is out of adjustment a second time, is readjusted. Similarly, readjustment can be called the increase or reduction of the salary received by a worker, whether it is a general one, or that obtained by a promotion. The word originates from the addition of the prefix “re” to the word “adjust”, whose root is just and which, etymologically, comes from the Latin “iustus”.

Readjustments occur when, for example, the prices of a company's service are adjusted and, later, due to circumstances external to it, they have to be readjusted. Generally, this occurs as a result of inflation; This phenomenon, studied mainly in macroeconomics, is the sporadic or systematic increase in prices, which can be caused by two situations: excess liquidity in the market or inflexibility that occurs in production, in addition to the combination of both. Likewise, inflation is often related to the devaluation of the currency, which contributes to a greater increase in prices, that is, it causes more adjustments.

The power purchasing is also a related concept. This is defined as the purchasing power on any product that a person has, and is determined by the value of the currency is used, a level internationally. This can decrease or increase in congruence with inflation.