Buzzword: Sacrifice ratio

Marketplace Staff Aug 25, 2006

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.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.  

Need some Econ 101?

Our new Marketplace Crash Course is here to help. Sign-up for free, learn at your own pace.