Question

1. Explain why the three (3) goals of macroeconomics are relevant .

2. Explain (give an example for each) cyclical, frictional, and structural unemployment?

3. Discuss two criticisms of the consumer price index (CPI)

Answer 1

1.Macroecomoics three goals are Economic growth,full employment and price stability.these three goals are widely considered to be beneficial and worth pursuing.each goal achieved by itself, improves the overall well being of socio.greater employment is typically better than less.stable price are better than inflation Economic growth is better than stagnation.

2.Cyclical Unemployment is the component of overall Unemployment that results directly from cycle of Economic upturn and downturn.example - during the financial crisis in 2008,the housing bubble burst and the great recession began

Frictional Unemployment- is a type of unemployment.it is called search Unemployment and can be based on the circumstances of the individual

Example-wait Unemployment

Structural Unemployment- structural Unemployment is a form of involuntary Unemployment caused by a mismatch between the skills that workers in the Economy can offer and the skills demanded of workers by employer.

Example- job training

3.1) CPI cannot be used to measure difference in prices level or living costs between one area and another .2) Too much weight to urban consumption.