Using typical estimates of the sacrifice ratio, how much output would likely be sacrificed to reduce inflation by 3 percent?
The typical estimate of the sacrifice ratio suggests reducing inflation by one percent requires sacrificing about 5 percent of one year's output. Therefore, reducing inflation by 3 percent would sacrifice about 15 percent of one year's output.
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If people refused to use banks to create checkable deposits, the banking system would:
a. not be affected in the money creating process. b. not have a way to loan out excess reserves. c. be able to expand the money supply by more than the money multiplier indicates. d. not be able to create new money. e. not be able to find new borrowers.
In the case of a negative externality, the entire marginal social cost curve lies
A. below the entire marginal private cost curve by the amount of the external costs associated with the negative externality. B. below the entire demand curve by the amount of the external costs associated with the negative externality. C. above the entire marginal private cost curve by the amount of the external costs associated with the negative externality. D. above the entire demand curve by the amount of the external costs associated with the negative externality. E. none of the above