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Business Economics-Gm545 Paper Ii

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PROJECT PAPER II

LISA JOHNSEN
BUSINESS ECONOMICS-GM545
SUMMER 2012
LCJOHNSEN@YAHOO.COM

Ch. 16
Question 5

“Frictional unemployment is important to any economy because people need time to search for new jobs, and employers need time to interview and evaluate potential new employees.” (Stone, 443). This involves short-term unemployment of people who are changing jobs, careers, or locations. The people looking for jobs are the jobless and are searching but have not found a job yet. Due to the mismatch of the characteristics of supply and demand in the job market this type of unemployment exists. The characteristics mentioned previously include skills, payment, location, timing, tastes, attitudes, as well as other factors. When people hold on for the ideal job extend frictional unemployment short-term while reducing unemployment long-term because they are less likely to change jobs. The good sign of frictional unemployment is that it signifies a healthy economy. This type of unemployment can only survive in a fast-growing economy. Frictional unemployment benefits workers by giving them time to search or jobs in which they are a good-fit while allowing companies to choose from the best talent available. Absence of frictional unemployment signifies a stagnant economy; one without growth, innovation, and tires skillsets.

Ch. 16
Question 6

“Hyperinflation is an extremely high inflation rate of at least 50 percent per month. Currently most economies refer to inflation above 100 percent per year as hyperinflation. According to the text “people who live on fixed incomes and creditors are harmed by unanticipated inflation, since it decreases the purchasing power of their incoming funds. By the same token, inflation helps debtors: it decreases the real value of their debts. These effects are amplified during periods of hyperinflation.”...

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