Question: 1. Kelli is a server at a casual restaurant in a small town. In each of the following situations, explain what type of unemployment Kelli is experiencing.

a. The local economy is experiencing a minor recession and the restaurant la Relli The owner assures her that she will be rehired when business pick up again.

b. A large factory, the major employer in the town, permanently closes and this hurts all restaurants in town. The restaurant fires Kelli because the owner can only afford to stay open on the weekends.

c. Kelli is dissatisfied with her schedule at the restaurant and quits her job. She is qualified to work at other restaurants and immediately begins to send her resume to restaurants all over town.

2. Ted is looking to borrow money from a local bank. He is told that the nominal rate i ed 8% and that includes an inflation expectation of 5% and a real interest rate of 3%. If there were unexpectedly high inflation over the term of this loan, would Ted be hurt or would the bank be hurt? Explain your answer

3. When tracking economic growth, why do economists prefer real GDP per capita over: a. real GDP b. nominal GDP per capita

4. Suppose that the supply of fossil fuels like coal and petroleum will become scarcer and scarcer in the next 50 years. With a growing global demand for energy and the looming threat of rising global temperatures, it would seem to be a recipe for a dramatic decrease in the growth rate of economic activity. Why do many economists believe that economies can continue to grow even in the face of resource scarcity?