Suppose the Current Inflation Rate Is 4 Percent and the Bank

Suppose the current inflation rate is 4 percent and the Bank of Canada wants to reduce it to 2 percent, knowing that the sacrifice ratio is 2. Apparently, the Bank of Canada is prepared to accept a decline of real GDP of as the cost of disinflation.

A) 2 percent of potential output.
B) 0.5 percent of potential output.
C) 8 percent of potential output.
D) 1 percent of potential output.
E) 4 percent of potential output.