If the Sacrifice Ratio Is 3, Reducing the Inflation Rate

question 170

Multiple Choice

If the sacrifice ratio is 3, reducing the inflation rate from 10 percent to 6 percent would require sacrificing

• A)2 percent of annual output.
• B)5 percent of annual output.
• C)6 percent of annual output.
• D)None of the above is correct.

---

Definitions:

Bottom-Up

An approach that starts at the most specific, detailed level and works up to a broader perspective, especially in planning and analysis.

Net Working Capital

The difference between a company's current assets and current liabilities, indicating short-term financial health and liquidity.

Pre-Tax Salvage

The estimated value of an asset before taxes that can be recovered at the end of its useful life through sale or disposal.

Variable Costs

Costs that change in proportion to the amount of goods or services produced or sold by a business.