Assignment
Please discuss the following questions based on two of the case studies of Economics in Action listed in chapter 8 of your text.
A) Structural Unemployment in Eastern GermanyThis EIA looks at the unemployment rate in Eastern Germany following the reunification of East and West Germany after the fall of the Berlin wall.
1. What type of unemployment did East Germany experience after unification, and why?
2. What caused wage rates in eastern Germany to remain relatively high despite lower worker productivity?
B) Israel's Experience with Inflation
This EIA presents the example of inflation in Israel in the mid-1980s.
1. What is meant by the term "clean" inflation?
2. Give an example of each of the types of inflation costs during Israel's mid-1980s inflation.