Question 1 - 4 points Please draw a normal business cycle and identify the peak, trough, expansion
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Question 1 - 4 points
- Please draw a normal business cycle and identify the peak, trough, expansion and contractions in the graph. Please make sure to label the axes (2)
- What does the peak in the business cycle represent? (1)
- What does the trough in the business cycle represent? (1)
Question 2 - 4 points
- Currently, the inflation rate is at 140% in Uruguay. How long will it take the prices of goods and services to double in the country? (1)
- In 2017, you had a full time job and your annual income was $35,000. Your wife was a housewife at that time. In 2018, you were laid off from your job but your wife started a new job. Her new job had an annual income of $40,000. Assuming 2017 as the base year and the inflation rate is 7%, did your purchasing power go up? (2)
- What is the main difference between demand pull and cost push inflation? (1)
Question 3 - 7 points
- Jonathan took a business loan from Chase Bank in 2016. The loan amount was $150,000 and had an interest rate of 6.75%. In 2017, the cost to buy goods and services went up by 1.25%. Please calculate the real interest rate to Chase bank. (1)
- Define natural rate of unemployment (1)
- In 2018, Bangladesh had a GDP loss/gap of 6.25% due to an unemployment rate of 9.5%. What is the natural unemployment rate in Bangladesh? (2)
- Identify three different groups that are not employed but willing to do jobs yet they are not classified as unemployed. (3)
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