If it is too inconvenient for you, you can answer the ones that you like the most. Please, anything helps To those who are willing to help, thank you so much. Please provide as detailed an answer as possible:?
Consider the following viewpoint from Larry Summers in the Washington Post, 24 May, 2021. Full article available here. \"The covid-19 chapter in U.S. economic history is coming to a close more rapidly than almost anyone expected, including me. Within weeks, gross domestic product will reach a new peak, and it is likely to exceed its pre-covid trend line before year's end, as the economy enjoys its fastest year of growth in decades. Job openings are at record levels, and unemployment may well fall below 4 percent in the next 12 months. Wages and productivity growth are increasing. This is both very good news and a tribute to the aggressive covid-19 containment policies of recent months, as well as to strong scal and monetary policies since the onset of the pandemic. Our economy has outperformed those of other industrial countries. U5. policymakers can take satisfaction from that. But new conditions require new approaches. Now, the primary risk to the U.S. economy is overheating and ination...... ...Fed and Biden administration o'lciais are entirely correct in pointing out that some of that ination, such as last month's run-up in used-car prices, is transitory. But not everything we are seeing is likely to be temporary. A variety of factors suggests that ination may yet accelerate including further price pressures as demand growth outstrips supply growth; rising materials costs and diminished inventories; higher home prices that have so far not been reected at all in ofcial price indexes; and the impact of ination expectations on purchasing behavior. Higher minimum wages, strengthened unions, increased employee benefits and strengthened regulation are all desirable, but they, too, all push up business costs and prices. First, starting at the Fed, policymakers need to help contain ination expectations and reduce the risk of a major contractionary shock by explicitly recognizing that overheating, and not excessive slack, is the predominant near-term risk for the economy. Tightening is likely to be necessary, and it is critical to set the stage for that delicate process.\" Your task is to: (i) Explain the similarities and differences of this viewpoint compared with that of the U.S. Federal Reserve, expressed in comments from Chair Jay Powell, that there is very little risk of long term inflationary pressure from the Fed's current policy stance. An example of this viewpoint is here. (ii) Illustrate both viewpoints using the model of aggregate demand, ination and output gaps that we have studied in this course. (iii) Which view do you think has greater merit? Why? (Marks will not be allocated separately to points (i), (ii) and (iii). Rather an overall mark out of 10 will be given.)
