Policymaking in a Representative Democracy

question 70

Multiple Choice

Policymaking in a representative democracy

• A)is straightforward and does not involve any disagreement.
• B)benefits from the input of economists, even if their advice is not always followed.
• C)is conducted without the input of economists.
• D)is always based exclusively on the results of economic analysis.

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Definitions:

Low Sacrifice Ratio

A condition indicating that an economy can reduce inflation with a relatively small decrease in economic output or increase in unemployment.

Inflation Rate

The rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.

Central Bank

An institution that manages a country's currency, money supply, and interest rates. Central banks also oversee the commercial banking system of their respective countries.

Sacrifice Ratio

The sacrifice ratio measures the cost of reducing inflation in terms of the percentage of GDP lost per each percentage point decrease in inflation.