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If the Sacrifice Ratio Is 3, Reducing the Inflation Rate

Question 52

Multiple Choice

If the sacrifice ratio is 3, reducing the inflation rate from 10 percent to 6 percent would require sacrificing what percent of annual output?

A) 1 1/4 percent of annual output
B) 4 percent of annual output
C) 7 percent of annual output
D) 12 percent of annual output

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