1. Employment hardship - it has been implied that unemployment rate should be replaced with an "employment hardship index" that tries to measure the % of people who have hardship because of their labor force status.
- what kinds of persons who are currently not counted as unemployed might fit into this category?
- what kinds of people who are currently not counted as unemployed would not suffer hardship? Discuss.
2. Real and nominal interests:
A local bank gives the following:
a.) 12 month savings certificate - $1000 -- %1 interest
b.) 60 month interest on car loan -- 4.29%
Compare these nominal interest rates with the current rate of inflation as measured by the most recently announced rate of change in the consumer price index. (this statistic is found here: www.bls.gov ... Bureau of Labor Statistics).
If the current rate of inflation were to continue unchanged, what real rate of interest would you earn on the saving certificate? What real rate of interest would you pay on the loan?