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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.

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