Review questions 6 1. List the phases of business cycle. Why are capital goods and durable goods more severely affected by business cycle than non-durable goods? 2. Why people are so concerned about unemployment? What is negative GDP gap and what are the main effects of it? 3. What is the difference between demand-pull inflation and cost-push inflation? Which one is more likely to cause a negative GDP gap? Which one is more likely to cause a positive GDP gap? What is core inflation? Why do we need to check core inflation? 4. In a year, Wonderland has 10 million people working full time. It also has 0.8 million people unemployed but actively looking for work. It also has 1 million discouraged workers who are unemployed and stop looking for work. What is Wonderland's unemployment rate? 5. Determine the types of unemployment, frictional unemployment, structural unemployment, or cyclical unemployment. a. Jack just graduated from JWU last week and is waiting for the start of his new job. b. In 2008, Mary, an associate at a local branch of Bank of America, was laid off. c. The ecommerce gradually gain popularity and it create lots of competition with traditional retail business