In 2021-2022, the U.S. experienced 9.1% inflation with 3.5% unemployment. By early 2024, inflation had fallen toward 3% while unemployment remained near 3.7%. This fell short of the large sacrifice ratio many economists expected. Using the PC framework, which explanation BEST accounts for this outcome?

Using the SRAS equation Y = Y_N + a(P – P^E), suppose Y_N = 18,000, a = 400, and the economy is currently in a boom with Y = 19,600. If P^E = 105, what is the actual price level P, and by how much does output exceed the natural rate?

Starting from long-run equilibrium, an economy receives a rightward AD shock. A policymaker proposes contracting monetary policy to return AD to its original position. What happens to Y and P if this contractionary response is perfectly timed and calibrated?

A senator proposes a rule requiring the federal government to balance its budget every year. An economist argues this would be ‘dangerously pro-cyclical.’ What does pro-cyclical mean in this context, and why would a balanced budget rule create it?

Using the PC equation u = u_N – a(pi – pi^e) with u_N = 4%, a = 0.5, pi^e = 3%: (a) Find u when pi = 7%. (b) Find pi when u = 5%. (c) What happens to both answers when pi^e rises to 5%?

Social insurance that provides economic assistance to persons faced with unemployment, disability, or old age and is financed by taxes on employers and employees is called ____________________.

Activities that lobbyists engage in include which of the following?

If a candidate wants to run as the nominee of a party and faces significant competition from at least one other member of their party for their party’s nomination then there are _____________ elections or stages of an election the candidate will have to run in.

An economy starts in long-run equilibrium. Simultaneously: (i) a foreign recession reduces U.S. exports (NX falls), and (ii) OPEC cuts oil production, raising energy costs for all U.S. firms. Analyze the combined short-run effect on P and Y, and explain why the price outcome is ambiguous.

The basic joint design having both members as butting members is the                     .