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- Subject
- The Phillips Curveeconomics-mcqs › the-phillips-curve
- Published
- 27 May 2019
- Last updated
- 28 May 2026
Explanation
The sacrifice ratio indicates the percentage of output lost for each percentage point reduction in inflation. With a sacrifice ratio of 5 and a 4% drop in inflation (from 7% to 3%), the total output reduction equals 5 multiplied by 4%, resulting in a 20% decrease in output.
More The Phillips Curve MCQs
Practice related questions from the same subject.
- 1.What is the likely effect of a credible and announced monetary policy tightening if individuals form rational expectations?
- 2.Refer to Exhibit 6. If the economy is initially at long-run equilibrium at point E, which point will the economy move toward following an unanticipated monetary tightening?
- 3.Refer to Exhibit 6. If the economy is initially at long-run equilibrium at point E, what point will the economy move toward following a sudden rise in government expenditure?
- 4.Based on Exhibit 6, if individuals anticipate a 3% inflation rate and the actual inflation rate is also 3%, at which point is the economy functioning?
- 5.What is the effect of a reduction in the price of imported oil on the short-run Phillips curve?
- 6.Which factor would cause the long-run Phillips curve to shift rightward?
- 7.According to the Phillips curve, what is the short-term effect on inflation if policymakers implement an expansionary policy to reduce unemployment?
- 8.What relationship does the short-run Phillips curve illustrate?
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