If the labour market is working properly, why
would there be any unemployment at all?
Are the 5 million workers who cannot find
jobs because of mismatching in the labour
market counted as part of the economy’s structural unemployment or part of its cyclical
unemployment?
The Price Level, Inflation, and Deflation
(Study Plan 21.3)
Use the following data to work Problems 8 and 9.
The people on Coral Island buy only juice and
cloth. The CPI basket contains the quantities
bought in 2013. The average household spent $60
on juice and $30 on cloth in 2013 when juice was
$2 a bottle and cloth was $5 a metre. In 2014, juice
is $4 a bottle and cloth is $6 a metre.