Exam 9: A: Business Cycles, Unemployment, and Inflation

In the table below are statistics showing the labour force and total employment during year 1 and year 5.Make the computations necessary to complete the table. (a) How is it possible that both employment and unemployment increased? (b) Would you say that year 5 was a year of full employment? (c) Why is the task of maintaining full employment over the years more than just a problem of finding jobs for those who happen to be unemployed at any given time?

Evaluate the statement: "Anticipated inflation is not too much a problem."

Explain the concept of Core Inflation

Describe and explain what is meant by downward sticky wages and unemployment.

How has the rate of inflation in Canada changed in the past five decades?

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," determine how many years would it take for the prices to double at each of these three inflation rates?

Some economists believe that moderate inflation cannot be accepted because a gradual increase in prices leads to an ever-rising rate of inflation.Other economists argue that in order to achieve rapid economic growth, some moderate price increases are necessary, and that rigid price stability would cause considerable unemployment.Contrast and evaluate these two points of view.

What is "demand-pull" inflation?

"Inflation is a harsh and arbitrary form of taxation." Do you agree? If so, who pays this tax?

Assume that nominal income is $35,000 and the price index is 1.20 in year 1.In year 2, nominal income rises to $38,000 and the price index rises to 1.25.What was the percentage change in real income from year 1 to year 2? What was the absolute amount of increase in real income? Make your calculations of the percentage change in real income and the absolute change in real income using the approximation formula and using the more precise method with index numbers.

Calculate the rate of inflation between Year 1 and Year 2.The price index in Year 1 was 124.0.It was 130.7 in Year 2.

Describe and explain the specter of deflation.

Use the following data to calculate: (a) the size of the labour force and (b) the official unemployment rate.Total population 1,500; population under age 15 and institutionalized, 360; not in labour force, 450; unemployed, 69; workers with part-time jobs who are looking for full-time jobs, 30.

How is the unemployment rate affected if employment increases from 9 million to 9.5 million and the labour force increases from 10 million to 11 million?

Inflation is frequently described as "too much money chasing too few goods." Is this an acceptable definition?

Explain the difference between real and nominal income.How can you get an approximation of the percentage change in real income from one-time period to another?

What is inflation and how is it measured?

In the table below are statistics showing the labour force and total employment in month 1 and month 2 of the same year.Make the computations necessary to complete the table.

If the population is 26.7 million, the labour force is 13.6 million, and the number measured as unemployed is 0.68 million, what is the rate of unemployment?

Answer the next four questions based on the following data using year 1 as the base year.All dollars are in billions. (a) Find real income in year 4.(b) What was the percentage rise in prices between years 1 and 3? (c) What was the percentage rise in prices between years 2 and 4? (d) What was the increase in real income from year 3 to year 4 in %?