Week 5 Personal Assignment - Name Christina Brown BUSN 5620...

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Name: Christina Brown BUSN 5620 Current Economics Analysis Week 5 Personal Assignment There are two Internet Questions included with this assignment. Problem 1 Could we ever achieve an unemployment rate below "full" employment? What problems might we encounter if it did? Yes, this is possible. However, the more scarce labor is the more apt workers will be able to request higher wages. This in turn could directly impact the prices of many products causes inflation. Problem 2 Why might inflation accelerate as the unemployment rate declines? As unemployment declines, this suggests that the economy is positively moving toward a full employment level and economic activity is strong. Macroeconomists begin to worry because this could lead to inflation. This inflation would be caused by price increases that usually accompany capacity production. Problem 3 Would it be advantageous to borrow money if you expected prices to rise? Why, or why not? Generally, I would say yes. It would be very advantageous to borrow money if you expected prices to rise, but only if you were able to lock in on a fixed interest rate and are able to purchase your products before prices rise. If the inflation is already included in the interest rate it is not advantageous to borrow money.
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