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

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26-04-2022
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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

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topeadeniran2 topeadeniran2 · Answer 1 · 2022-04-29T10:20:55+02:00

When Fed reduces inflation 1 percentage point and this makes output fall 5 percentage points and unemployment rises, the sacrifice ratio is 5.

What is inflation?

It should be noted that inflation simply means the general increase in the price of goods.

The sacrifice ratio is calculated as:

= Output fall / Inflation reduction

= 5%/1%

= 5

The sacrifice ratio is 5.

Learn more about inflation on:

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