Question

16. Lillian buys some common stock in 2000 for $10,000 and sells it in 2014 for $15,000. During the same period, prices have risen by 50 percent. The net result of Lillian's stock purchases is that she will a. pay taxes on the nominal capital gain, $5,000 b. earn a real capital gain of S15,000 minus 50 percent. c. pay taxes on the nominal capital gain, $15,000 d. pay no taxes because her real capital gains are less than her nominal capital gains. 17. Deflation is most likely to occur when the GDP is a. potential GDP. above b. equal to c. below d. All of the above are equally likely 18. If you as a lender want an increase in purchasing power of 6 percent from making a loan and you set the nominal interest rate at 10 percent, then your expected rate of inflation is over the course of the a. b. C. d. 4% 16% 10% 6% 19. John was just laid off because his skills are not needed any more. a. structural unemployment b. frictional unemployment c. cyclical unemployment d. seasonal unemployment John is suffering from

Answer 1

17, c below -

Explanation - Deflation occurs when actual GDP is less than potential GDP

19, d Seasonal unemployment -

Basically, any seasonal job (seasonal employment) will have seasonal unemployment to go with the fact that there is a demand some parts of the year and not others.

Some examples follow.

Resort jobs, like on ski slopes, are seasonal, available when the slopes have snow and drying up when the snow goes.

Agricultural employment - some seasons do not call for the number of workers that peak seasons do.