Buzzword: Sacrifice ratio
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Buzzword: Sacrifice ratio
An economic bloodletting brings us this week’s Marketplace Money Buzzword: Sacrifice ratio.
The sacrifice ratio is a bit of math that says inflation ebbs when more people are unemployed.
The ratio measures what percentage of jobs must be lost to shave a point off inflation.
In the 90s, when the unemployment rate rose by 1.5 percent, inflation dropped a percent.
But now, some economists claim that it may take four times as many lost jobs to appease the inflation gods
This week Fed Chief Ben Bernanke attended a meeting to discuss the sacrifice ratio.
No word yet on who may be the proverbial lamb.
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