Sacrifice Ratio
 |
Definition of '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 explains 'Sacrifice Ratio'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 Definitions
Articles Of Interest
-
What Are Central Banks?
They print money, they control inflation, and much, much more. All you need to know about central banks is here. -
What Is Fiscal Policy?
Learn how governments adjust taxes and government spending to moderate the economy. -
Economics Basics
Learn economics principles such as the relationship of supply and demand, elasticity, utility, and more! -
Economic Indicators To Know
The economy has a large impact on the market. Learn how to interpret the most important reports. -
Introduction To Treasury Inflation-Protected Securities (TIPS)
If you want to protect your portfolio from inflation, all you need are a few TIPS. -
Nobel Winners Are Economic Prizes
Before you try to profit from their theories, you should learn about the creators themselves. -
Breaking Down The Balance Of Trade
The balance of trade is a key indicator of a nation’s health. Investors and market professionals appear more concerned with trade deficits than trade surpluses, since chronic deficits may be ... -
Open Market Operations Explained
The term “open market operations” refers to a monetary policy tool in which central banks buy and sell bonds to regulate the money supply in the economy. The United States employs open market ... -
How To Profit From Inflation
Inflation - defined as a sustained increase in the price of goods and services - seems to be inevitable. While rising prices are bad news for consumers, as it takes an ever-increasing amount ... -
Market Summary for July 26 2013
The major U.S. indices moved largely lower this week, with technical indicators suggesting that declines will continue next week, or at least that sideways trading will take hold.
Free Annual Reports