Which of the Following Best Defines the Sacrifice Ratio

question 11

Multiple Choice

Which of the following best defines the sacrifice ratio?

• A) the sum of the inflation and unemployment rates
• B) the inflation rate divided by the change in output
• C) the number of percentage points annual output falls for each percentage point reduction in inflation
• D) the number of percentage points unemployment rises for each percentage point reduction in inflation

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Definitions:

Stimulate

To stimulate in economic context means to encourage or boost economic activity, often through monetary or fiscal policy, to spur growth and reduce unemployment.

Keynes

Refers to John Maynard Keynes, an economist who is best known for his theories on the causes of prolonged unemployment and the influence of aggregate demand on the economy.

Worldwide Depression

A prolonged period of economic downturn that affects multiple countries and economies around the globe.

Interest Rates

The cost of borrowing money, typically expressed as a percentage of the amount borrowed, paid to lenders over a period.