In which of the following situations is a program to reduce inflation likely to have the lowest costs?
A)if the sacrifice ratio high and the reduction is unexpected
B)if the sacrifice ratio high and the reduction is expected
C)if the sacrifice ratio low and the reduction is unexpected
D)if the sacrifice ratio low and the reduction is expected

Question

Quizplus · Accepted Answer

If the sacrifice ratio is low and the reduction is expected, then the costs of reducing inflation are likely to be the lowest. A low sacrifice ratio implies that output losses due to reducing inflation are minimal. When the reduction is expected, people can adjust their expectations and behavior accordingly, resulting in a smoother adjustment process and lower costs. Therefore, option D is the correct answer.

In Which of the Following Situations Is a Program to Reduce