Civilian Unemployment Rate

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1. Briefly explain the reason why the unemployment rate is inversely related to the growth rate in real GDP in the business cycle.

2. The misery index is the sum of the inflation and the unemployment rates. Why do you think this sum is referred to as a "misery index"? Access the data for the unemployment rate and for the inflation rate at Economagic. Plot the sum of the inflation and the unemployment rates. In what year was the misery index the highest since World War II? What caused the misery index to be so high?.

3. When a worker is displaced (laid off or fired), how long does it take for them to find a new job? Do you think the job search takes longer for younger or older workers? Briefly explain your reasoning. Access the Monthly Labor Review Internet site (from the Bureau of Labor Statistics) that describes how long it takes for a displaced worker to find a new job. Was your reasoning consistent with the data presented in the article?

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