1. Why do most economists prefer to consider core inflation instead of overall inflation to assess inflation in the short run?

A. Because overall inflation is based on a very restricted basket of goods and doesn't include services

B. Because overall inflation is a good way to redistribute income in a progressive manner

C. Because core inflation eliminates items for which prices are fixed over time

D. Because core inflation seeks to remove the temporary effects of volatile prices such as food and energy in order to better identify trends in inflation

2. Hysteresis occurs when a significant number of the unemployed remain out of work for an extended period of time, rendering them unemployable. Thus, short-term unemployment resulting from a recession may become long-term unemployment, which becomes a "permanent" fixture of the economy. This is likely to translate in:

A. a constant NAIRU

B. an increase in frictional unemployment

C. a decline in cyclical unemployment

D. a decline in the labor force participation rate or an increase in structural unemployment