The Sacrifice Ratio Measures The

question 62

Multiple Choice

The sacrifice ratio measures the:

• A) number of percentage points of the money supply that must be reduced to reduce inflation by 1 percentage point.
• B) extra taxes that must be paid to balance the budget.
• C) number of months of real gross domestic product (GDP) that must be foregone to reduce the inflation rate by 1 percentage point.
• D) percentage of a year's real gross domestic product (GDP) that must be foregone to reduce inflation by 1 percentage point.

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Definitions:

Cash Dividends

Payments made by a company to its shareholders from its profit or retained earnings.

Statement Of Cash Flows

A financial statement that provides aggregate data regarding all cash inflows and outflows a company receives.

Operating Activities

Transactions and other events that are not investing or financing activities, relating to the primary operations of a business.

Financing Activities

Activities that result in changes in the size and composition of the equity capital and borrowings of a company.