If the Hypothesis of Hysteresis Is Correct and Output Is

question 61

Multiple Choice

If the hypothesis of hysteresis is correct and output is lost even after a period of disinflation, the sacrifice ratio for an economy will:

• A) increase.
• B) decrease.
• C) remain unchanged.
• D) be zero.

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Definitions:

After-tax Cost

The expense of an action or item after accounting for the impact of taxation.

Coupon

A financial term referring to the annual interest payment received by a bondholder from the bond's issuer until it matures.

Weighted Average Cost

An inventory valuation method which assumes goods are used in the order in which they were purchased, often leading to a cost that is somewhere between the oldest and newest products.

Marginal Tax Rate

The tax rate that applies to each additional dollar of income earned; the percentage of tax paid on any additional income earned.