Questions:
1. Labor Market Statistics
Type of statistic Number (millions)
Population under the age of 16 16
Population over the age of 16 54
Retirees 14
Discouraged workers 3
Frictionally unemployed 1.5
Structurally unemployed 2.5
Cyclically unemployed 6
a. How many people are in the country's labor force?
b. What is the labor force participation rate?
c. What is the unemployment rate?
d. What is the natural unemployment rate?
e. What is the rate of cyclical unemployment?
2. Interest Rates and Inflation
Year Expected Actual Nominal Interest Rates Real Interest Rates
2006 2% 3% 3% 0%
2007 1% 3% 2% -1%
2008 2% 3% 4% 1%
2009 7% 5% 9% 4%
This table shows inflation and interest rate data on loan contracts in different years.
a. Fill in the "Real interest rates" column.
b. In which year(s) were the actual real interest rates on loan contracts negative?
c. In which year(s) did lenders gain at the expense of borrowers?
d. In which year(s) did borrowers gain at the expense of lenders?