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State difference between sacrifice ratio and gain ratio on the basis of purpose of calculation?
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State difference between sacrifice ratio and gain ratio on the basis o...
Sacrifice ratio is calculated at the time of admission of partner as if a partner admits into a firm thn old partners have to sacrifice their ratio in favor of new partner.
gaining ratio is calculated during retirement or death of a partner because if a partner retires or dies thn rest of the partners get share of the retired partner
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State difference between sacrifice ratio and gain ratio on the basis o...
Purpose of Calculation:

The sacrifice ratio and gain ratio are both economic indicators used to measure the cost of reducing inflation. However, they are calculated with different purposes in mind.

Sacrifice Ratio:
The sacrifice ratio is a measure of the short-term costs associated with reducing inflation. It quantifies the trade-off between lower inflation and higher unemployment or reduced output in the economy. The calculation of the sacrifice ratio involves determining the percentage decrease in output or increase in unemployment that is required to achieve a one percentage point reduction in inflation.

Gain Ratio:
On the other hand, the gain ratio focuses on the long-term benefits of reducing inflation. It measures the increase in output or decrease in unemployment that results from reducing inflation by one percentage point. The gain ratio provides an estimate of the potential positive effects of anti-inflationary policies on the overall economy.

Differences:

1. Purpose:
- The sacrifice ratio measures the short-term costs of reducing inflation.
- The gain ratio measures the long-term benefits of reducing inflation.

2. Focus:
- The sacrifice ratio focuses on the negative consequences such as increased unemployment or reduced output that may occur in the short run.
- The gain ratio focuses on the positive outcomes such as increased output or decreased unemployment that may result in the long run.

3. Calculation:
- The sacrifice ratio is calculated by determining the percentage decrease in output or increase in unemployment necessary to achieve a one percentage point reduction in inflation.
- The gain ratio is calculated by determining the increase in output or decrease in unemployment resulting from a one percentage point reduction in inflation.

4. Timeframe:
- The sacrifice ratio is concerned with the short-term effects and costs of reducing inflation.
- The gain ratio considers the long-term benefits and improvements in the economy resulting from reducing inflation.

5. Policy Implications:
- The sacrifice ratio can help policymakers evaluate the potential costs and trade-offs associated with implementing anti-inflationary measures.
- The gain ratio can inform policymakers about the potential positive effects of reducing inflation and support the case for implementing anti-inflationary policies.

In summary, while both the sacrifice ratio and gain ratio are measures related to the cost of reducing inflation, they differ in their purpose of calculation. The sacrifice ratio focuses on the short-term costs, while the gain ratio emphasizes the long-term benefits. These indicators provide valuable insights for policymakers when formulating and evaluating anti-inflationary measures.
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State difference between sacrifice ratio and gain ratio on the basis of purpose of calculation?
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State difference between sacrifice ratio and gain ratio on the basis of purpose of calculation? for Class 12 2024 is part of Class 12 preparation. The Question and answers have been prepared according to the Class 12 exam syllabus. Information about State difference between sacrifice ratio and gain ratio on the basis of purpose of calculation? covers all topics & solutions for Class 12 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for State difference between sacrifice ratio and gain ratio on the basis of purpose of calculation?.
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