William Rainey Harper College

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MACROECONOMICS IN THE GLOBAL ECONOMY

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WEEK 8 - Unemployment and Inflation

QUESTIONS ???

SURVEY RESULTS

If an economy is achieving FULL EMPLOYMENT, the unemployment rate will be about:

0 % - 1 students

2 % - 5 students

5 % - 4 students

8 % - 3 student

WEEKLY ASSIGNMENTS

Week 8 - Unemployment and Inflation - Chapter 7
  • Reading Assignments: ALL of chapter 7
  • Worked Problem 7.1 and 7.2 at http://www.mcconnell17.com
  • Web Quizzes at http://www.mcconnell17.com
    • 1: #1, 3, 5, 7-10 (note: #1 the correct aswer is 5%)
    • 2: #1, 2, 5-10
    • 3: #1-3, 5-10
  • Study Guide
    • Multiple Choice: # 1-4, 613, 16-18, 20-25
    • Problems: # 1, 2, 3, 5, 6

REVIEW:

 

  • If the population is 267 million, the labor force is 136 million, and the number measured as unemployed is 6.8 million, what is the rate of unemployment?

 

  • What are two criticisms of the unemployment rate? How do these criticisms relate to the overstating or understating of the unemployment rate?

 

  • Explain the differences among the frictional, structural, and cyclical forms of unemployment.

 

  • Name the type of unemployment occurring in each of the causes below and explain your answer.
    • (a) Frank recently lost his job as the computer manufacturing company he works for recently downsized after poor sales and poor performance of the economy during the last year.

      (b) Julie just recently graduated from college and is spending the summer traveling before she begins a job with a consulting firm in the fall.

      (c) Tom recently lost his job as the steel manufacturing firm he worked for moved their plant overseas. The other steel plants in the nation have been also been following this trend.

      (d) Susan recently left her marketing job at a local bank because she found that finance interests her more. She is currently looking for a job as a financial consultant.

     

  • Define the "full-employment" or "natural" rate of unemployment and give its approximate percentage rate as economists currently define it.

 

  • What is the consumer price index

 

  • The table below shows the price index in the economy at the end of four different years. (a) What is the rate of inflation in years 2, 3, and 4? (b) Using the "rule of 70," how many years would it take for the prices to double at each of these three inflation rates?

    Year

    Price index

    Rate of inflation

    Years to double

    1

    100

    |

    |

    2

    108

    |

    |

    3

    120

    |

    |

    4

    132

    |

    |

  • What is "demand-pull" inflation?

 

  • Describe cost-push inflation and its major source.