AP MACROECONOMICS ( short answers please no big explanations, please label in numbers 1-3)

1. The country has an open economy with a flexible exchange rate market, and produces pencil and paper. The natural rate of employment is 7%, the frictional rate of unemployment is 4%; and the actual unemployment rate is 8%. A. What is the numerical value of the cyclical unemployment in the economy? B. What is the numerical value of the structural unemployment in the economy? C. Assume the foreign demand for paper decreases. What will happen to cyclical unemployment in the economy in the short run? 2. The table below shows the market basket quantities and prices of pencil and paper, the only two goods produced in the economy. A. Assume 2017 is the base year. Based on the data in the table, calculate the price index for the year 2018 in the economy. Show your work. Goods Quantity 2017 2018 Pencil $20 $25 Paper 5 $3 $4 3. If nominal income increased by 25% from 2017 to 2018, will the standard of living for everyday citizens increase, decrease, or remain the same from 2017 to 2018? Explain