Problem
I. The Bureau of Labor Statistics counts as employed people who work part-time, but would prefer to work full-time. Suppose the people who had part-time jobs, but wanted full-time jobs, were counted as partially unemployed. Explain how the unemployment rate and the labor force participation rate would change.
II. Japan experienced periods of deflation-a declining price level-during the 1990s. During a deflationary period, which would be higher: nominal GDP or real GDP? Why? Assume that the base year of choice is prior to the deflationary period.
III. Suppose you obtain a fixed rate mortgage during a period of relatively high inflation. During the next ten years, inflation falls. Did you gain or lose from the lower inflation rate? Explain why.