Inflation reduction has the lowest cost when the efforts are
A)credible so that the sacrifice ratio is low.
B)credible so that the sacrifice ratio is high.
C)unexpected so that the sacrifice ratio is high.
D)unexpected so that the sacrifice ratio is low.

Question

Quizplus · Accepted Answer

When inflation reduction efforts are credible, people and businesses adjust their expectations accordingly, leading to a lower sacrifice ratio, which means less economic output is lost in the process of reducing inflation.

Inflation Reduction Has the Lowest Cost When the Efforts Are