ANSWERS TO HOMEWORK WEEK THREE EC141

ANSWERS TO HOMEWORK WEEK THREE EC141 - ANSWERS TO HOMEWORK...

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ANSWERS TO HOMEWORK WEEK THREE EC141 CHAPTER 5 1. Inflation is an increase in the overall price level. In the simple economy described in the question, you might be tempted to look at the average price of the three goods to see how the overall price level has changed. On January 1, 2007 the average price was ($2.50 + $3.00 + 1.50)/3 = $2.33, whereas at the end of the year it was ($5.00 + $2.00 + 1.50)/3 = $2.83. From this you can conclude that on average prices are higher. This is a simple version of a price index. A better measure would include information about the relative importance of each of the three goods in consumer’s budgets (you could then construct a weighted average as your price index, which is discussed in chapter 7). 2. The unemployed are those who are not working for pay or profit but who have made specific efforts to find a job during the week of the employment survey. In simple terms, it is the excess of labor supplied over labor demanded in the market. The labor demand curve
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This note was uploaded on 11/19/2010 for the course EC 141 taught by Professor - during the Fall '08 term at Park.

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ANSWERS TO HOMEWORK WEEK THREE EC141 - ANSWERS TO HOMEWORK...

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