1.Suppose a country is about to enter phase 3 (recovery) of disinflation: inflation has stopped, but with a recessionary output gap. The central bank is weighing its two options.

a.What are these options, and what is the main risk associated with each one?

MY ANSWER IS: 1.Wages fall, OR

2.The central bank increases the money supply sufficiently

BUT I do not know how to describe the main risk associated with each one, so plz help me solve this question.

b.Suppose that the country has a potential GDP of $50B, but the process of disinflation will result in a cumulative loss of $3.75B. However, inflation is reduced from 7% to 2% as a result. What is the sacrifice ratio? MY ANSWER IS: (3.75/50)/(0.07-0.02)=1.5