Question

question 46
2 pts
suppose that an economy is currently experiencing 14 percent unemployment and 10 percent inflation. if the fed brings down inflation by 2 percentage points and real gdp falls by 6 percent for a year, then the sacrifice ratio is (answer to 2 decimal places)

Explanation:

Step1: Define sacrifice ratio

The sacrifice ratio is the percentage loss of real GDP divided by the percentage reduction in inflation.

Step2: Identify given values

Real GDP loss = 6%, Inflation reduction = 2%

Step3: Calculate sacrifice ratio

$\text{Sacrifice Ratio} = \frac{\text{Loss of Real GDP}}{\text{Reduction in Inflation}} = \frac{6}{2}$

Answer:

3.00