The disinflation carried out with a cold turkey policy from 1980 to 1985 had a sacrifice ratio of
A)35.5.
B)5.9.
C)450 billion.
D)4.4

Question

Quizplus · Accepted Answer

The sacrifice ratio measures the cost of reducing inflation in terms of lost output. The cold turkey approach in the early 1980s, led by the Federal Reserve under Paul Volcker, had a sacrifice ratio of approximately 4.4, indicating the percentage of GDP lost for each percentage point reduction in inflation.

The Disinflation Carried Out with a Cold Turkey Policy from 1980