Question

Homework #1 Name: 1) What are the differences and similarities between a recession and a depression? 2) What is the economic definition of unemployment? 3) Define inflation. What is one potential macroeconomic consequence of inflation? 4) Take the partial derivatives of the following function with respect to x. f(x)-3x3+4xy -xy+3x-1 5) Take the partial derivatives of the following function with respect to y f(y)-3x3 +4x2y -xy +3x-1

Answer 1

1) a recession is a negative economic growth situation which continues for two or more consequitive quarters. and depression is a severe or more negative recessionary situation which lasts longer. similarities between the two is that in both the situation employment, output, and economic growth declines. government borrowing also increases in both the situation. the dissimilarities are: the recession harms one single country at a time but depression has impact world wide. recession is a cause but depression is effect of that. recession is a short period phenomena while depression is a long term phenomena. unemployment rate in recession is a little low but in depression it is very severe.

2) an economic definition of unemployment is that its a situation where a person in working age is willing and is ready to work in preveling wage rate but is still not getting the job. unemployment occurs when a working age person is actively searching for employment is unable to find work.

3) inflation means increase in general price level over a period of time.or we can say a sustained increase in general price level in the economy over a period of time. one potential macro economic consequence of inflation is decrease in rate of unemployment. as we know there is a trade off between inflation and unemployment in the short run, due to inflation the unemployment rate in the economy will decline ond vice versa.

he 9 8