Suppose That an Economy Is Currently Experiencing 10 Percent Unemployment

question 67

Multiple Choice

Suppose that an economy is currently experiencing 10 percent unemployment and 15 percent inflation.If in the process of bringing inflation down by 2 percentage points,real GDP falls by 6 percent for a year,the sacrifice ratio is

• A)5.
• B)2.
• C)12.
• D)None of the above is correct.

---

Definitions:

Leverage

Utilizing borrowed capital to amplify the possible gains from an investment.

Interest Rate

The percentage of a sum of money charged for its use, typically expressed on an annual basis.

All Equity

A financing structure where a company's capital structure is composed entirely of equity without any debt.

Repurchase Shares

The action taken by a company to buy back its own shares from the marketplace, reducing the amount of outstanding stock.