Essays (50 points) - Please write a clear, detailed answer for each question that completely answers the question.Be detailed and use examples please.There are 10 questions and each question is worth 5 points.

1.What is the role of the financial system? Name and describe two markets that are part of the financial system in the U.S. economy.

2.Why is it important for people who own stocks and bonds to diversify their holdings? What type of financial institution makes diversification easier?

3.Describe the 3 problems that make CPI an imperfect measure of the cost of living.

4. Explain the meanings of nominal interest rate and real interest rate.How are they related?

5.What does the level of a nation's GDP measure? What does the growth rate of GDP measure?

6. Explain how higher savings leads to a higher standard of living.What might deter a policymaker from trying to raise the rate of saving?

7.How does the rate of population growth influence the level of GDP per person?

8.What are the three categories into which the Bureau of Labor Statistics divides everyone?How does the BLS compute the labor force, the unemployment rate, and the labor-force participation rate?

9. Are minimum wage laws a better explanation for structural unemployment among teenagers or among college graduates? Why?

10.What claims do advocates of unions make to argue that unions are good for the economy?

Part 2:Definitions (50 points) - Please define the following terms using book-based information.Please do not Google the answer.It is not always correct.Please use an example where appropriate.There are 10 terms worth 5 points each.

Financial System

Budget Deficit

Crowding Out

Consumer Price Index

Inflation Rate

Labor Force

Discouraged Workers

Efficiency Wages

Human Capital

Diminishing Returns