The Sacrifice Ratio Is the Percentage Point Increase in the Unemployment

question 38

True/False

The sacrifice ratio is the percentage point increase in the unemployment rate created in the process of reducing inflation by 1 percentage point.

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Definitions:

Increasing Opportunity Costs

The concept that the cost of forgoing the next best alternative increases as resources become more specialized in production.

Guns And Butter

A term used to describe a country's decision to allocate its resources between defense and civilian goods.

Production Possibility Frontier

A curve depicting all maximum output possibilities for two or more goods given a set of inputs.

Production Possibility Frontier

A curve depicting the maximum attainable combinations of two products that may be produced with available resources and technology.