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Case Study 1, Project 5, Fi 504

864 words - 4 pages

Chapter 16
Question #5
Worker are always coming and going in a healthy economy. Many Americans are going to always look for a better job or better opportunity. More than often they will stay unemployed until whatever situation comes first. One of three reasons for the unemployment in the US is what is called frictional unemployment. Frictional Unemployment is a time period when people are transiting from one job to the other or even searching for a new job. Some workers leave a job without lining up another. Also some workers quit a job for whatever reason just to go to a new one. Other will leave or quit a job because of sickness, retirement, or a pregnancy. These people will always be ...view middle of the document...

Hyperinflation is an extremely high rate of inflation. This is a condition in which the prices increase rapidly as the currency losses its value. Most economists refer to an inflation rate above 100%. For example, let’s say you have $40.00 on February 1 and an inflation rate of 100% a month for the next three months. At the end of the third month, the $40.00 will be worth only $5.00. Hyperinflation is a serious problem with many negative effects. One of the causes is an excess of government spending over tax revenues coupled with the printing of money to finance this deficits. When money is printed by the government, the value of the currency falls as prices rise. When people get money, they will usually go out to purchase whatever. The problem with this is the monetary system breaks down and the barter system takeover. In the end, this is devastating to the economy.
Hyperinflation affects everyone affects everyone in a certain way and is hard to avoid. A restored confidence in the government is a good way to stop hyperinflation. This requires a new currency and sometimes a new regime. In order for this to happen, the new government must rein in the deficit and reduce the growth of the money supply.

Chapter 16
Question #11
There are three type of unemployment: frictional, structural, and cyclical. First frictional unemployment is always present in this economy and usually last for a short period of time. This is workers who voluntarily quit their jobs to search for better positions. Also moving to a new job, but may take serve days or weeks before they can report to a new employer. Next, structural unemployment is...

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