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the number of percentage points annual output falls for each percentage point reduction in inflation

the number of percentage points annual output falls for each percentage point reduction in inflation

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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Question 37 The Sacrifice Ratio is best defined as which of the following? the inflation rate divided by the change in output the sum of the inflation and unemployment rates the number of percentage points unemployment rises for each percentage point reduction in inflation the number of percentage points annual output falls for each percentage point reduction in inflation Which of the following does Rational Expectations Theory contend about the Sacrifice Ratio and why? The sacrifice ratio is low because it is rational for people not to immediately change their expectations. The sacrifice ratio is high because it is rational for people not to immediately change their expectations. The sacrifice ratio is high because people adjust their expectations quickly if they find anti-inflation policy credible. The sacrifice ratio is low because people adjust their expectations quickly if they find anti-inflation policy credible. The Time Inconsistency of government policy implies which of the following? People always expect more inflation than policymakers claim they are trying to achieve. What policymakers say they will do is generally what they will do, but people don't believe them because of current policy. When people expect that inflation will be low, it is harder for the Bank of Canada to increase output by increasing the money supply. The Bank of Canada coordinates its actions with elected officials.
Transcribed Image Text:Question 37 The Sacrifice Ratio is best defined as which of the following? the inflation rate divided by the change in output the sum of the inflation and unemployment rates the number of percentage points unemployment rises for each percentage point reduction in inflation the number of percentage points annual output falls for each percentage point reduction in inflation Which of the following does Rational Expectations Theory contend about the Sacrifice Ratio and why? The sacrifice ratio is low because it is rational for people not to immediately change their expectations. The sacrifice ratio is high because it is rational for people not to immediately change their expectations. The sacrifice ratio is high because people adjust their expectations quickly if they find anti-inflation policy credible. The sacrifice ratio is low because people adjust their expectations quickly if they find anti-inflation policy credible. The Time Inconsistency of government policy implies which of the following? People always expect more inflation than policymakers claim they are trying to achieve. What policymakers say they will do is generally what they will do, but people don't believe them because of current policy. When people expect that inflation will be low, it is harder for the Bank of Canada to increase output by increasing the money supply. The Bank of Canada coordinates its actions with elected officials.
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