Unemployment and economic policy
1. How it is possible for a country to have low inflation,
high unemployment rates, and an expanding economy all at the same time. What
causes this to happen and as a portfolio manager, what trading strategies could
you implement to protect your interest and why you would or would not expect to
make a profit. Use graphs and other information to support your answer, where
possible.
2. If income elasticity of demand for 14-day and 3-day
advance train tickets is 3 and 1.5 respectively, what effect would a high
unemployment rate have on the train industry and the economy. Use graphs and
other information to support your answer, where possible.
3. If price level is unchanged, what effect will a monetary
policy that is contractionary have on the real income level and private
placement balance of a country. Use graphs and other information to support
your answer, where possible.
