The Estimate of the Sacrifice Ratio from the 1980s Disinflation

question 47

Multiple Choice

The estimate of the sacrifice ratio from the 1980s disinflation in Canada is approximately:

• A)5-6.
• B)3-4.
• C)1-1.5.
• D)0-0.5.

---

Definitions:

Supply-Side Economics

Main tenets: economic role of federal government is too large; high tax rates and government regulations hurt the incentives of individuals and business firms to produce goods and services.

Systematic Error

refers to a consistent, predictable error present in the results of measurements or experiments due to flaw in the measurement system.

Rational Expectations

A theory in economics suggesting that individuals make decisions based on their rational outlook, available information, and past experiences.

Adaptive Expectations

A theory in economics that expectations of future events are constructed based on past events and that agents adjust slower to new information.