Question1. Productivity often increase during economic expansions and decreasing during economic recessions. Can you think of reasons why? Briefly explain. (Hint:Remember that the level of productivity involves both levels of output and levels of labor input.)

Question2. Use the following information to compute [A] the size of the labor force and [B] the official unemployment rate: total population, 500; population under 16 years of age or institutionalized, 120; not in labor force, 150; unemployed, 23; part-time workers looking for full-time jobs,10.

Question3. Describe how an increase in your nominal income and a decrease in your real income might occur simultaneously. Who loses from inflation? Who loses from unemployment? If you had to choose between [A] full employment with 6 percent yearly rate of inflation and [B] price stability with an 8 percent unemployment rate, which would you choose? Why?