The Sacrifice Ratio Is

question 10

Multiple Choice

The sacrifice ratio is:

• A)the sum of the inflation and unemployment rates
• B)the percentage by which actual output falls below full employment output for every one percentage point that actual unemployment is above the natural rate of unemployment
• C)the inflation rate divided by the unemployment rate
• D)the number of percentage points of annual output that are lost in the process of reducing inflation by one percentage point

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Definitions:

Economic Life

The expected period during which an asset remains useful to the average owner.

Face Value

The nominal or dollar value printed on a financial instrument, such as a bond or stock certificate.

Required Return

The minimum profit or yield that investors expect or require from an investment.

Interest

The cost of borrowing money or the income earned from lending money, usually expressed as a percentage of the principal.