Gallaway
ECO 385
Spring 2005

Homework #2

All homework should have a cover page indicating the student's name, class, and row number. All homework assignments should be typed.  Math  and graphs can be handwritten if done very neatly. You may work in groups.  See the syllabus for relevant guidelines.

1. Do problem 1 (chapter 7) from page 225 of your book.
2. Is there a tradeoff between output and inflation in the long run?  Explain.
3. What are the factors that help determine the size of the "natural" rate of unemployment?  In your answer, be sure to list the two types of unemployment that make up the natural rate and cause it to be greater than zero.
4. Do problem 6 (chapter 10) from page 335 of your book.