Case Study 1, Project 5, Fi 504

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 considered unemployed. The key to frictional unemployment is that labor and other resources do not function perfectly. This means that it takes time for the unemployed to search for available jobs that meet certain qualifications. On the other end, the employer needs to take time to search through the pool of applicants. Workers that are considered part of frictional unemployment are usually not unemployed very long. Many change jobs for different reasons. A certain percentage of the labor force in the U.S. will be frictionally unemployed at any given time. Even though frictional unemployment sounds bad, it is good for the economy. Frictional unemployment cannot be eliminated, and may even be desirable by some economist. This type of unemployment helps the economy function more efficiently because people who are seeking better jobs, people are graduating and just entering the job market. Some frictional unemployment will always exist in any economy. If workers did not move around, both competition and production would be lessened and that would not be good for the economy.

Chapter 16

Question #6

Before we discuss the impact of hyperinflation on our economy, we must first discuss what this term means. Hyperinflation is an extremely high rate of inflation. This is a condition...