During the COVID-19 pandemic, many high-income countries, including the US, extended the unemployment insurance payments, allowing the unemployed to benefit from these payments for longer periods of time. Such measures were not adopted in Turkey, that is, the unemployment insurance program was not changed.

a. Using the IS-LM-PC framework, please explain in detail the effects of this labor market policy (that is, extending unemployment insurance payments) on output, employment, inflation, real and nominal wages in the US.

b. Using the same framework, discuss in detail how the absence of such a policy would affect the same outcomes in Turkey.

c. If you were the policymaker, which policy or policies would you use to address this issue?