Suppose the population of Smithtown is 500,000. There are 50,000 people who are in school full-time and 30,000 retired. We also know that there are 50,000 who stay-at-home and another 20,000 institutionalized. There are 40,000 under the age of 16. Smithtown has 280,000 employed workers. What's the unemployment rate in Smithtown? (Show your work and round your answer to the nearest 10th. For example, if your answer is 3.86, you would round to 3.9%--that's the nearest 10th.)

Full employment = 5%, so how much cyclical unemployment do we have in Smithtown? _______

Calculate the economic costs to Smithtown by applying Okun's law. What would our GDP gap be if potential GDP were $900B? (Do not use all those "0's" in your calculator, just use the number 900 and then add a "B" after it to indicate "billions" in your answer.)

If the CPI in January of 2007 was is 202.4, and the CPI in January of 2008 was 211.1, what was the rate of inflation that year? What can you say about the number you calculated-is it "good" or "bad" and how do you know?

If inflation is the amount you calculated in #2, how long before our prices double?