Consider the process of disinflation.Typical estimates for the sacrifice ratio for many developed economies suggest that reducing inflation by 1 percentage point "costs" the economy between ________% of real GDP.

Question

Quizplus · Accepted Answer

The sacrifice ratio for many developed economies, which measures the cost of reducing inflation by 1 percentage point in terms of lost real GDP, typically falls between 2 and 4 percent. This range reflects the economic output sacrificed to lower inflation, indicating the trade-off between inflation reduction and economic performance.

Consider the Process of Disinflation