Question

QUESTION 4-9

1.When Inflation occurs, but the fix wage labor contract and lending contracts don’t have an inflation clause written in the contracts, List who gains from the inflation and why a. In fixed wage labor contracts: gainers are______________, because____________________ b. In fixed interest rate lending contracts: gainers are_____________. Because ______________ c. In progressive income tax laws gainers are_______________because_________________________ 2. When deflation occurs, but the fix wage labor contract and lending contracts don’t have a deflation clause written in the contracts, List who gains from the deflation and why d. In fixed wage labor contracts: gainers are______________, because____________________ e. In fixed interest rate lending contracts: gainers are_____________. Because ______________ f. In progressive income tax laws gainers are_______________because_________________________ 3. If a 3%/year inflation rate is expected over the next few years, how would labor contracts and lending contracts and progressive income tax law be adjusted to minimize the gains and losses from inflation a. labor contract should have a clause that states the wages will____________ b. lending contracts should have a clause that states interest rates will_________________ c. progressive income tax laws should have a clause that states an individual’s income will have to ____________ 4. Define unemployment 5. define the labor force 6. define the unemployment rate 7. define the labor force participation rate 8. List the sources of “natural unemployment” 9. Extra credit: if inflation occurs who would gain: holders of money balances, or holder

Answer 1