Question

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.

Answer 1

Answer:

D. Productivity (and thus aggregate supply) grew faster than previously.

Explanation:

This was seen to take place in the second half of the year 1990 which is seen to be in the 20th century explaining trade run-off between inflation and unemployment; this is seen to directly talk of their relationship and how they did not seem to arise in the years second half. A lot of factors are seen to have effect on this but the rate of change in unemployment. It is seen that when an economy is booming, employers will bid more vigorously for workers, which means that demand for labor is increasing at a fast pace therefore, they would if the demand for labor were either not increasing or doing so at a low pace.