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.