In the 1980s, U.S.economists acknowledged that, it was not possible to exploit the tradeoff suggested by the Philips curve of the 1960s.This realization led to more stable macroeconomic policy, which in turn contributed to:
A)more volatility in real output.
B)less volatility in real output.
C)complete removal of unemployment.
D)more volatility in the price level.
E)short business cycles.

Question

Quizplus · Accepted Answer

The acknowledgment that the tradeoff suggested by the Philips curve was not possible led to more stable macroeconomic policy, which in turn led to less volatility in real output. This is because policymakers shifted their focus from trying to manipulate the short-term tradeoff between inflation and unemployment to promoting long-run economic growth and stability. As a result, they were able to better manage economic fluctuations and avoid major recessions or booms.