Assignment

1. What are the three types of unemployment? Unemployment is seen by some as undesirable. Are all three types of unemployment undesirable? Could the advent of the Internet completely eliminate frictional unemployment? Are all three types of unemployment undesirable? Explain.

2. Classical economists belief that prices and quantities adjust to the changes in the forces of supply and demand and that the economy produces its potential output in the long run. On the contrary, Keynesian economists believe because of price and wage rigidities the economy's equilibrium output in the long run may be less than its potential output. What is price-wage rigidity? Do you agree with Keynes assessment that wage-price rigidity requires government's involvement in the markets? Why? Why not?

3. An interesting concept called the "Paradox of Thrift" arises when households become concern about their future and attempt to increase their saving. As a consequence of such action the overall economy will suffer. Explain. Do you agree with this assessment?

Again note that a minimum of 250 words for the initial discussion posts is required

4. What are the basic objectives of monetary policy? Comment on the cause-effect chain through which monetary policy is made effective. What are the major strengths of monetary policy?

5. What are the limits to U.S. long-term economic growth? Is there anything that our government can do to address these limits, or would it be a bad idea to try?