If the Sacrifice Ratio Is 3, Reducing the Inflation Rate

question 52

Multiple Choice

If the sacrifice ratio is 3, reducing the inflation rate from 10 percent to 6 percent would require sacrificing what percent of annual output?

• A) 1 1/4 percent of annual output
• B) 4 percent of annual output
• C) 7 percent of annual output
• D) 12 percent of annual output