| | Business Economics GM545 Project 2 |

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Chapter 16-Question #5
Frictional unemployment
Unemployment that is always present, it occurs when employees are transitioning from one place of employment to another or employees searching for new or better positions (Frictional Unemployment, 2013).
Frictional unemployment is a natural part of our economy, and is considered to be necessary and beneficial. Frictional unemployment gives people time to search for jobs that they really want. It allows employers to choose the best employees to suit their demand.
Without frictional unemployment, employees will be forced to continue to remain in jobs that they do not want, and employers will be forced to continue to employ employees that are not best suited for the jobs that they are in (Stone 2008).

Chapter 16-Question #6
Hyperinflation is described as an extremely high rate of inflation, in the past it was thought that hyperinflation occurred when inflation was 50% a month, but now it has been redefined as when inflation is 100% per year.
Hyperinflation is caused when government spending exceeds is tax revenues, and government is forced to print more money to finance these debts without concrete backing. During the peak of inflation, workers are paid hourly and they scramble to purchase whatever their earnings will allow them. In the end, money has no value, and other forms of trades such as barter takes over. This causes a distrust in the money and consumers are not willing to accept money as a form as payment.
Hyperinflation is very difficult to stop, and stopping it requires that government restores the people’s confidence in its budgeting proves and change of regime or presidency and a new currency. According to the text, Germany experienced hyperinflation after World War I, and was forced to make major changes to its government (Stone 2008).