Brad Eylander

Economics 212, Summer 2007

Problem Set #1

1. (10 points) Using the textbook reading from chapter 4, what are three major macroeconomic issues
that you can relate to personally? For each of the three that you chose, explain an experience you or
your family have had connects you to that issue. Explain how the government might use monetary,
fiscal, or structural policy changes to help people or society deal with the three major issues you chose.
Be sure to address each of the three.

2. (10 points) Explain the difference between the civilian population and the civilian labor force. Make
up a numerical example of a country where the unemployment rate is at the natural rate of 10% and
construct a table that gives the numbers for the civilian population, the civilian labor force, the number
employed, and the number unemployed. Explain what the labor force participation rate is and calculate
it for your example. What is the “full employment” level of employment in this economy? Can
unemployment be above zero at full employment? Explain. (Show your work for all calculations.)