—Federal Reserve Chairman Ben S. Bernanke, April 27
testimony to the Joint Economic Committee of Congress.
“As the utilization rates of labor and capital approach their
maximum sustainable levels, continued growth in output—if it is to
be sustainable and noninflationary—should be at a rate consistent
with the growth in the productive capacity of the economy.
Admittedly, determining the rates of capital and labor utilization
consistent with stable long-term growth is fraught with difficulty,
not least because they tend to vary with economic circumstances.
Nevertheless, to allow the expansion to continue in a healthy
fashion and to avoid the risk of higher inflation, policymakers must
do their best to help to ensure that the aggregate demand for goods
and services does not persistently exceed the economy’s underlying