1.Complete the table below to answer the following questions: Year Price Index Nominal Wage Real Wage 2016 220 $40,000 ? 2017 224 $42,000 ?


a.      Find the 2017 inflation rate.

b.     Morgan’s nominal 2017 salary is given above. Is she making more or less than she made in 2017, adjusted for inflation? How ?

2.      Identify each case as an example of structural, cyclical, or frictional unemployment

a.      Businesses begin to see significantly reduced sales. Several close down and workers lose their jobs.

b.     A student graduates from college and begins looking for a job.

c.      A factory deploys a new computer system and lays off several employees it no longer needs.

d.     A worker leaves his job to relocate where his spouse works.

e.     Good X is an increasingly obsolete technology. Companies that make good X shut down and workers lose their jobs. These workers are specialized in making good X and can’t find new jobs utilizing those skills.

f.       A parent re-enters the workforce when her children start school.

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