How is the sacrifice ratio measured How big is the sacrifice

How is the sacrifice ratio measured? How big is the sacrifice ratio in Canada? In other countries? What problems are there in measuring the sacrifice ratio?

Solution

Sacrifice ratio formula=Dollar cost of production loss/percentage change in Inflation.

Sacrifice ratio in Canada is around 4

In European countries it\'s about 1-2%

India-2%

Problem in measuring sacrifice ratio-

Measuring potential output-This is because small differences in the trends can make huge difference for sacrifice ratio.