Econ 98-Chiu GDP, Unemployment, & Inflation Worksheet Spring 2005Name & SID: Date:1. Define gross domestic product using the expenditures approach.2. Define gross domestic product (in words).3. True, false, or uncertain. William increases investment spending by buying stocks and bonds.4. What is the difference between structural and cyclical unemployment? Which type of unemployment is worse? Explain.Page 1 of 2Econ 98-Chiu GDP, Unemployment, & Inflation Worksheet Spring 2005Name & SID: Date:5. Calculate inflation. CPI in July 2003 was 183.9 and CPI in August 2003 was 184.6. (Unadjusted CPI-U on all items from Bureau of Labor Statistics as of September 16, 2003)6. Does the CPI overstate or understate inflation? Explain.7. What are the benefits and costs of inflation? Do unexpected increases in inflation help lenders or borrowers, workers or employers? How does unexpected inflation affect investment spending? Explain.8. What is deflation? How can unexpected increases in deflation be as harmful to the economy as unexpected increases in inflation?Page 2 of
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