The U.S. economy was able to achieve full employment with relative price level stability between 1996 and 2000 because
A) aggregate demand increased.
B) aggregate supply decreased.
C) aggregate demand increased and aggregate supply increased.
D) aggregate demand decreased and aggregate supply increased.

Question

Quizplus · Accepted Answer

During this period, both aggregate demand and aggregate supply increased. The rise in aggregate demand stimulated economic growth and employment, while the increase in aggregate supply helped keep inflation (price levels) stable. This combination allowed for full employment without causing significant inflation, which is a rare and desirable economic situation.

The US Economy Was Able to Achieve Full Employment with Relative