Suppose a country is experiencing a hyperinflation.Even a small sacrifice ratio would suggest that it would be incredibly costly for such a country to eliminate inflation.For example, suppose the sacrifice ratio is one, but inflation is running at 5000 per cent per year.Then the sacrifice ratio suggests that it would cost 50 years worth of output to get inflation to zero! This is obviously not right.Why does the sacrifice ratio not provide a good way of measuring the cost of ending a hyperinflation?
Correct Answer:
Verified
View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
Q46: A group of economists offer the theory
Q47: Suppose that the RBA increases the money
Q48: The _ Phillips curve is downward sloping
Q49: If the sacrifice ratio is 6 per
Q50: The Phillips curve is:
A)a negative association between
Q52: Explain how a demand shock can affect
Q53: Most macroeconomic variables - for example, GDP
Q54: Friedman and Phelps concluded that policymakers face
Q55: Using the theory of rational expectations of
Q56: What is the lesser of two evils
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents