Ball found that an important factor affecting the sacrifice ratio is
A)the flexibility of the labor market.
B)the shape of the yield curve.
C)the real interest rate.
D)the tightness of fiscal policy.

Question

Quizplus · Accepted Answer

The flexibility of the labor market affects the sacrifice ratio because a more flexible labor market can adjust more quickly to changes in monetary policy, reducing the economic cost (in terms of lost output) of reducing inflation.

Ball Found That an Important Factor Affecting the Sacrifice Ratio