The Volcker disinflation
A)had virtually no impact on output,just as the classical dichotomy suggested.
B)was associated with rising output,perhaps due to expansionary fiscal policy.
C)caused output to fall,but by less than the typical estimate of the sacrifice ratio suggested.
D)None of the above is correct.

Question

Quizplus · Accepted Answer

The Volcker disinflation caused output to fall, but by less than the typical estimate of the sacrifice ratio suggested. This means that the negative impact on output was not as severe as predicted, possibly due to factors such as expansionary monetary policy or increased productivity. Neither option A nor option B accurately reflects the impact of the Volcker disinflation.

The Volcker Disinflation