Homework Answers
a) "B"
A person who has lost his job and gave up looking for a new one will not be considered in the labor force.As long as he is looking for the job he will be considered as unemployed and in the labor force.
b) "D"
The borrowers gain from the unexpected inflation in the market as they have to return a less money i.e. the money whose purchasing power is less in the market,
c) Real interest rate = Nominal rate - inflation.
real rate = 8% - 2% = 6% The answer is "D".
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