Task:
"Unemployment and Inflation" Please respond to the following:
Imagine that you have a fixed 30-year interest rate for your mortgage, and the economy has experienced unanticipated inflation. Examine who the winner and loser would be. Is it the borrower or the lender in the given scenario? Provide support for your response.
Question 1:
The CPI in 1930 was 16.70 and in 2015 it was 237.017. In 1930, legendary baseball player Babe Ruth was paid $80,000.00. How much would his 1930 salary be worth in 2015?
(Note: The CPI numbers in the above exercise from obtained this website, using the average annual index:
https://inflationdata.com/Inflation/Consumer_Price_Index/HistoricalCPI.aspx? )
Question 2:
Given the information below, what would the official unemployment rate be reported as?
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Measurements of underutilized labor as a percent of the total labor force in the US for March 2016
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%
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Persons structurally unemployed labor
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2.1
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Persons discouraged from seeking employment
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2.0
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Persons frictionally unemployed
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2.4
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Persons underemployed for economic reasons (working part-time because they could not find full-time employment)
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2.0
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Persons cyclically unemployed due to a downturn in the economy
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0.5
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Persons marginally attached to the labor force (day workers or those who need child care at home or lack transportation for steady employment)
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0.8
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