Sacrifice Ratio
An economic ratio that measures the costs associated with slowing down economic output to change inflationary trends. The ratio is calculated by taking the cost of lost production and dividing it by the percentage change in inflation, and its quotient gives the loss of output per 1% change in inflation:
Investopedia Says:
If inflation is becoming a problem, central banks will try to cool economic growth in a bid to reduce inflationary pressures. However, this reduction in output costs the economy in the short term, and the sacrifice ratio tries to measure that cost. Related Terms:
Central Bank
Dove
Economy
Gross Domestic Product - GDP
Hawk
Inflation
Macroeconomics
Monetary Policy
Money Supply |