If the Sacrifice Ratio Is 5 Per Cent, Then Reducing

question 56

Multiple Choice

If the sacrifice ratio is 5 per cent, then reducing the inflation rate from 12 per cent to 4 per cent would require sacrificing _____ per cent of annual output.

• A)5
• B)8
• C)13
• D)40

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Definitions:

AOL Corporation

An American web portal and online service provider, which historically offered a branded internet service that allowed users to connect to the internet and access its own network of content.

Consumer Price Index

The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, used to estimate inflation.

Purchasing Power

The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy.

Real Cost

The total cost of producing a good or service, including both the monetary and opportunity costs.