GP

1. The author at the time of the article in March states that the coronavirus pandemic problem is both a supply side and a demand side problem, noting further that the stimulus in an environment of a continuing lockdown would fuel inflation. The data for US inflation in the months that followed showed inflation remained muted. Discuss the rationale for the author’s argument and then explain plausible reasons for why inflation did not materialize.

2. Inflation though has started to climb mildly in the last month, is this a fluke or not? Provide an AD-AS model based argument for your thoughts.