If the Sacrifice Ratio Is 2,reducing the Inflation Rate from 4

question 20

Multiple Choice

If the sacrifice ratio is 2,reducing the inflation rate from 4 percent to 2 percent would

• A)cost 1 percent of annual output.
• B)cost 4 percent of annual output.
• C)imply that unemployment would rise by 1%.
• D)imply that unemployment would rise by 4%.

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Definitions:

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Unattainable Production

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The value of the best alternative forgone when a decision is made over others.