Inflation/Unemployment

At the end of this activity, you will have analyzed the relationship between inflation and income and demand and supply factors.

Respond to the following questions on inflation:

• How can inflation impact market participants differently? Explain how some market participants can benefit from inflation, while other market participants can lose.
• Why is deflation bad?
• Why should real values be more important to market participants than nominal values?

Part 2 Unemployment

At the end of this activity, you will have analyzed the measurement and causes of unemployment.

Respond to the following questions on unemployment:

• Why will our economy never experience 0% unemployment? Provide specific examples of unemployment that will always exist.
• Do you believe the process used to measure our nation’s unemployment yields accurate results? Be sure to support your answer with facts reflecting the process currently used by the Bureau of Labor Statistics.