In the last half of the 1990s, the usual short-run trade-off between inflation and unemployment did not arise because
A)the Fed held interest rates constant.
B)the federal government balanced its budget.
C)the U.S.personal savings rate rose.
D)productivity (and thus aggregate supply) grew faster than previously.

Question

Quizplus · Accepted Answer

During the late 1990s, the U.S. experienced rapid productivity growth, which increased aggregate supply. This allowed the economy to grow without causing inflation, thus avoiding the usual trade-off between inflation and unemployment.

In the Last Half of the 1990s, the Usual Short-Run