1. What advice would you give to someone who is unemployed for frictional reasons and is looking for work? What if they are unemployed for structural reasons? Finally, what about if they are unemployed for cyclical reasons?

2. Suppose that you borrow money from a bank at a fixed rate of interest, but that over the period of the loan, the inflation rate turns out to be much higher than both you and the bank expected. In that case, is it better to have been the borrower or the lender? Explain your reasoning.

3. Assume the CPI price index is calculated using the basket of goods listed below. What was the inflation rate in 2016?