354 Module 5 Re-cap

Concerning the data you looked for: During the 90s, we enjoyed 8 years of economic expansion with falling unemployment rates and low inflation. It amazes me that people were surprised that the economy slowed down and dove into a recession in 2001 and again in the serious downturn of 2008. Business cycle ups and downs are well established through history. My guess is that 2016 will be a period of relatively slow growth as the lingering uncertainties of the credit crisis, the War on Terrorism, and the fluctuating price of oil cloud the spending decisions of households and firms. It appears interest rates will not be pushed up by the Federal Reserve- this should help, though inflationary pressures are perhaps building again. Tough to predict.

About the questions from Chapter 6:

1. The true u/e rate is much higher than the official rate- part time workers are really “semi- u/e”.

2. There will always be some fricitional u/e. The lowest rate we ever had was about 1% (1944)

3. I think structural u/e is the toughest to solve- square peg in a round hole.

4. Unemployment reduces national income which impacts spending, saving, investment, etc.

5. Limit labor supply, keep wages up.

6. Many immigrants may increase labor supply and depress wages.

7. 10/170= ___%

8. A deflation would help exports, but would generally destabilize the economy.

9. Tokyo is a high cost city relative to other places (inflation is the change in prices over time).

10. If the CPI rises, many people see adjustments in their incomes (COLAs).

You should now see a full summary of the Exam.

“Original document by Peter Turner licensed CC BY”