The table that follows shows some data on various disinflations. In each case, assume that potential GDP

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The table that follows shows some data on various disinflations. In each case, assume that potential GDP is equal to \(\$ 900 \) billion.

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a. In each case, compute the sacrifice ratio.

b. Explain why the sacrifice ratio can be expected to be smaller when expectations are more forward-looking.

c. Explain why the sacrifice ratio can be expected to be smaller when central-bank announcements are more credible.

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Macroeconomics

ISBN: 9780133910445

15th Edition

Authors: Christopher T S Ragan

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