Consider an Economy That Is in the Process of a Disinflation.If

question 103

Multiple Choice

Consider an economy that is in the process of a disinflation.If the sacrifice ratio is 3,then

• A)unemployment increases by 3% for every 1% reduction in inflation.
• B)it costs 3% of GDP to reduce inflation by 1 percentage point.
• C)the cumulative loss of output in the economy will reach a total of 3%.
• D)the costs of disinflation are 3 times the benefits of disinflation.
• E)unemployment increases by 3% during the period of disinflation

Understand the relationship between demand elasticity and expenditure on items, including luxuries versus necessities.

Understand the concept of cross-price elasticity of demand and how it influences consumer choices.

Comprehend the impact of income changes on demand elasticity for different products.

Interpret the significance of income elasticity of demand for various goods.