If a central bank reduces inflation 2 percentage points and this makes output fall 3 percentage points and unemployment rise 5 percentage points for one year, the sacrifice ratio is
a. 5/2.
b. 3/2.
c. 2/3.
d. 2/5.
b
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Changes in consumer confidence, business optimism, government spending, and foreign events that cause economic volatility are known as
A) Supply Shocks. B) Demand Shocks. C) Aggregate Demands. D) Real Business Cycles.
Use the following table for a hypothetical single-product economy. year units of output price per unit price index (1=100) 1 10 10 100 2 12 20 200 3 15 30 300 4 20 40 400 Refer to the above data. Nominal GDP in year 4 is:
a) $320. b) $450. c) $225. d) $800.
Suppose you observe a decrease in the equilibrium price and quantity of corn. Of the options listed below, this is best explained by:
A. a decrease in the cost of growing corn. B. an increase in the cost of growing corn. C. a fall in consumer income assuming corn is a normal good. D. a rise in consumer income assuming corn is a normal good.
If monetary policy must be used to set the market equilibrium value of the exchange rate equal to the official value, it:
A. will increase the rate of growth in the economy. B. will be unable to stabilize the market equilibrium value of the exchange rate. C. will simultaneously stabilize the domestic economy. D. is no longer available to stabilize the domestic economy.