The Fed's interest rate response to the rising output ratio experienced from 1997 to 1999 is explained by
A)beneficial supply shocks which pushed down the inflation rate.
B)the Fed's efforts to help end the Asian financial crisis
C)the Fed's uncertainty about the concepts of the natural level of output and natural rate of unemployment.
D)All of the above.

Question

Quizplus · Accepted Answer

The Fed's interest rate response during 1997 to 1999 can be attributed to a combination of factors: beneficial supply shocks that helped lower inflation rates, efforts to mitigate the effects of the Asian financial crisis, and uncertainty regarding the natural levels of output and unemployment. These factors collectively influenced the Fed's monetary policy decisions during that period.

The Fed's Interest Rate Response to the Rising Output Ratio