Topic 1: Underemployment and Unemployment
There are different types of unemployment in the economy. Moreover, some employed people are underemployed, particularly during economic downturns like recessions.
Discuss the differences between unemployment and underemployment and give examples for each of them.
A. What are the costs of unemployment and underemployment on the economy? Which of them do you think is a more serious “problem” for the economy?
B. How might underemployment be addressed through government policy?
C. What are the various forms of unemployment? What type of unemployment is the most difficult to solve? Why?
Topic 2: Costs of Inflation
In this Unit, you discussed some of the problems associated with inflation. Stabilizing prices is one of the macroeconomic goals of policy making. Price stability calls for taming inflation or deflationary pressure in the economy.
List one of these problems and describe a situation in which you encountered this problem.
A. What are the costs of inflation? What are the costs of deflation?
B. Why do policymakers need to tame inflation (deflation) in order to stabilize prices?
C. When does rate of inflation become a problem in the economy?