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Suppose a Central Bank Reduced Inflation by 4 Percentage Points

Question 158

Multiple Choice

Suppose a central bank reduced inflation by 4 percentage points and that made output fall by 4 percentage points for five years, and it made the unemployment rate rise from 3 percent to 7 percent for three years. What is the sacrifice ratio?


A) 1
B) 3
C) 4
D) 5

Correct Answer:

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