Most economists attribute the Great Moderation experienced in the United States during the 1990s mainly to:
A)Good fortune
B)Improved technology
C)Aggressive fiscal policy
D)Better understanding and use of monetary policy

Question

Quizplus · Accepted Answer

Most economists attribute the Great Moderation to the better understanding and use of monetary policy by the Federal Reserve. The Fed adopted a new policy approach that focused on inflation targeting and a more gradual approach to interest rate adjustments. This helped to stabilize the economy, promote steady growth, and reduce the severity of business cycles. While good fortune and improved technology may have also played a role, they are not considered the main driver of the Great Moderation. Aggressive fiscal policy is also unlikely to have been a primary factor, as the federal government was largely focused on reducing deficits and balancing the budget during this period.

Most Economists Attribute the Great Moderation Experienced in the United