1. How does the Bureau of Labor Statistics calculate the rate of inflation from one year to the next?  The unemployment rate is the number of unemployed divided by the labor force. An increase in the unemployment rate does not necessarily mean a decline in the labor force; a higher unemployment rate can occur if the number of people entering the labor force as unemployed is larger than the number of people entering the labor force as employed. 

2.What effect does inflation have on the purchasing power of a dollar? Inflation and purchasing power are inversely proportional, as prices increase with inflation, purchasing power of your dollar decreases. You get less for your money with inflation.

3. Explain the Rule of 70.  estimate the number of years for a variable to double, take the number 70 and divide it by the growth rate of the variable.

4. Okun’s law predicts that when the actual unemployment rate exceeds the natural rate of unemployment by two percentage points, the GDP gap will equal 1%______ of the potential GDP.