Suppose the Economy Is Currently Experiencing 9% Inflation Per Year

question 42

Multiple Choice

Suppose the economy is currently experiencing 9% inflation per year.If the Fed wants to reduce inflation to 3% and the sacrifice ratio is 4,then how much annual output must be sacrificed in the transition?

• A)4%
• B)8%
• C)16%
• D)24%

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Definitions:

Fictitious Payee Rule

A principle in commercial law that protects the drawer of a check if the check is made payable to a non-existent or not intended recipient, under certain conditions.

Bookkeeper

A person responsible for recording the financial transactions and maintaining the financial records of a business.

Negotiable Instruments

Written documents that guarantee the payment of a specific amount of money to the bearer or to a specific person, under certain conditions.

Fraud in the Inducement

A type of fraud that occurs when a person is deceived into entering into an agreement through misrepresentation of material facts.