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Macroeconomics 3

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1. What is the inflation rate? Is inflation a worry or are we in a period of stable prices?

Inflation is the overall increase of price for goods and services. Inflation rate is the percentage in which the prices increases on goods and services. This rate is typically determined by the Consumer Price Index (CPI) and the Producer Price Index (PPI). The Bureau of Labor Statistics generates data monthly on the changes of prices. To calculate the inflation rate, you would take the difference in price from two different period of times (years), divide the answer by the original price and multiply that by 100 to get the percentage. The current inflation rate of the United States was calculated through August 2014 and published on September 17 at 1.7%. Price stability is achieved when prices stay constant over an extended period of time or the fluctuation is minimal and easily determined. Currently inflation is at a low but does not necessarily mean the economy is out of trouble. These lower prices may be a prediction to possible problems in the future of the global market. Therefore current inflation is not a concern but its current decrease may be a concern for the future.

Websites: http://www.investorwords.com/2452/inflation.html www.bls.gov/cpi/ www.usinflationcalculator.com/inflation/current-inflation-rates http://www.marketwatch.com/story/fading-inflation-good-for-consumers-but-hints-at-lurking-threats-2014-10-19 2. What is the unemployment rate? Will a high unemployment rate cause deflation? What is the current structure of the labor market? How does the current structure affect the threat of cost push inflation or deflation?

Unemployment is the total amount of people who are looking for work do not currently have jobs. The unemployment rate is a percentage of the number of people in the labor force (amount of people working and those who are

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