If the Fed Reduces Inflation 1 Percentage Point and This

question 169

Multiple Choice

If the Fed reduces inflation 1 percentage point and this makes output fall 5 percentage points and unemployment rises 2 percentage points for one year, the sacrifice ratio is

• A)1/5.
• B)2.
• C)5/2.
• D)5.

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Definitions:

Iconic Memory

A type of visual sensory memory that holds an exact copy of the seen object for a very brief period of time.

Limbic System

Neural system (including the amygdala, hypothalamus, and hippocampus) located below the cerebral hemispheres; associated with emotions and drives.

Hippocampus

A region of the brain associated with memory formation, navigation, and emotional response.

Explicit Memories

Memories that can be consciously recalled, such as facts or events.