QUESTIONS:

1) Economists, policy makers, business people and investors are all worried about current inflation and where it is headed. Is this just a "business cycle" worry (given policy steps to bring inflation down) or does it go deeper than that? What effect can inflation have on the production function - hence for long-term growth - that is worrying these economists and policy makers?

2) Consider the following headline and the graph on Total US Bankruptcy Filings in 2020 and 2021. At first blush it is somewhat surprising that bankruptcy filings went down during the COVID-19 pandemic. At second blush, it actually makes quite a lot of sense. Please consider how this short-run outcome affects the robustness of the US production function and, hence, how this short-run outcome may impact long-run growth of the US economy. {Hint: be sure to work in the concept of creative disruption.}

2020 Bankruptcy Filings Lowest in 35 years New December bankruptcy filings continue a 14-year slide January 05, 2021 10:49 ET | Source: Epiq 4,000 3,500 2018 ........ 3,000 2019 2.500 2020 2.000 2021 1,500 1,000 500 er nuary April May aber February Mar Ju August September October Nove Dece