For example, suppose the central bank wants to reduce the inflation rate from 20% to 12% over a period of 4 years. To achieve this rate, suppose the economy must bear the cost of an output level 12% below plausible in the first year, 9% below the plausible in the second year, 6% below plausible in the third year, and 5% below plausible in the fourth year. Thus the total loss of GDP is 32% (12%+9%+6%+5%) and the decrease in inflation rate is 8%. Thus the sacrifice ratio is 4 (32/8).