How is the sacrifice ratio measured? How big is the sacrifice ratio in the United States? In other countries? What problems are there in measuring the sacrifice ratio?
What will be an ideal response?
The sacrifice ratio is measured as the percentage by which output falls below potential for every percentage point decline in inflation. In the United States, the sacrifice ratio is about 2, while other countries have sacrifice ratios ranging from 3/4 to 3. The sacrifice ratio is difficult to measure because it's hard to calculate what output would have been in the absence of disinflation and because supply shocks may distort the calculation.
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Empirical evidence reveals a(n) __________ relationship between money and stock prices
A) positive and consistent B) negative and consistent C) completely independent D) inconsistent
Consider the market for university economics professors. Suppose the opportunity cost of going to graduate school to get a Ph.D. in economics decreases for many individuals. Suppose it generally takes about five years to get a Ph.D. in economics. Holding all else constant, in five years the equilibrium wage for university economics professors will
a. increase. b. decrease. c. not change. d. It is not possible to determine what will happen to the equilibrium wage.