The recession of the early 1990s produced a sacrifice ratio ________ that of the much larger recession of the 1980s.
A)greater than
B)slightly smaller than
C)much smaller than
D)equal to

Question

Quizplus · Accepted Answer

The sacrifice ratio is the amount of output loss that occurs when central banks attempt to reduce inflation. The recession of the 1980s was much larger in magnitude than the recession of the early 1990s, meaning that it required a greater sacrifice ratio. Therefore, the sacrifice ratio for the early 1990s recession was much smaller than that of the 1980s recession.

The Recession of the Early 1990s Produced a Sacrifice Ratio