If the Sacrifice Ratio Is Five, a Reduction in Inflation

question 31

Multiple Choice

If the sacrifice ratio is five, a reduction in inflation from 7 per cent to 3 per cent would require

• A) a reduction in output of 5 per cent.
• B) a reduction in output of 15 per cent.
• C) a reduction in output of 20 per cent.
• D) a reduction in output of 35 per cent.

---

Definitions:

Default in Payment

Occurs when a borrower fails to make a loan payment on time as agreed upon in the loan agreement.

Gross Profit Rate

The percentage difference between a company's net sales and the cost of goods sold, indicating the efficiency of sales generation.

Sales Dollar

Refers to the total revenue generated from sales of goods or services, measured in dollars.

Administrative and Selling Expenses

Expenses incurred by a business in its day-to-day operations, including salaries of non-production staff, marketing costs, and office supplies.