1. kate just graduated from college and is looking for her first job. paul did not finish high school and cannot find any employment. sam is unemployed because the economy is in recession.
using complete sentences, identify and define the type of unemployment each person as listed.

2. inflation is the general rising of prices within the economy. explain cost-push inflation and demand-pull inflation and the impact these two types of inflation have on fiscal policy decisions.

3. there are four major indicators of economic health for a nation: gross domestic product, consumer price index, personal/disposable income, and unemployment rate.
choose three types of economic indicators and show how these determine the health of a nation's economy. you must use complete sentences in your answer.

1)
Kate is unemployed because of "Frictional unemployment".  This type of unemployment is the time period between jobs when a worker is searching for or transitioning from one job to another.
Paul is unemployed because of "Structural unemployment". This type of unemployment is caused due to mismatch between the requirements of the employers and the properties of the unemployed.
Sam is unemployed because of "Cyclical unemployment". This type of unemployment that occurs when there is not enough aggregate demand in the economy to provide jobs for everyone who wants to work.

2)
Cost-push inflation basically means that prices have been "pushed up" by increases in costs of any of production in labor, capital, land or entrepreneurship. Demand-pull inflation occurs when there is an increase in aggregate demand in households, businesses, governments and foreign buyers. The impact of these inflation on fiscal policy decisions is that, If an economy identifies what type of inflation is occurring (cost-push or demand-pull), then the economy may be better able to rectify rising prices and the loss of purchasing power.

3)
GROSS DOMESTIC PRODUCT: Since consumer spending represents around two-thirds of GDP, a small change in consumption exerts a significant effect on GDP. This means that as the stock market falls, it causes GDP t9 fall even further, which further intensifies the downward pressure on the stock market.

PERSONAL/DISPOSABLE INCOME: In addition to income taxes, the government subtracts health insurance premiums and involuntary retirement plan contributions from gross income when calculating disposable income for wage garnishment purposes.

UNEMPLOYMENT RATE: In tough economic times, the unemployment rate may be lower than the number of people out of work because the official rate only includes those actively looking for work. Those workers who have become discouraged and dropped out of the labor force are not counted in unemployment statistics. For the same reason, men or women who do not work for an employer, but work full-time at home raising children are not factored into the official unemployment number.

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