Consider the model of unemployment with job separation rate s = 0.05 and job finding rate f = 0.20. If the unemployment rate U = 10,000, L = 200,000, and E = 190,000 then what will the natural rate of unemployment be? Please show your calculation. If U were to fall to 5,000 because of an exogenous shock, how would the unemployment rate change in the short run? In the long run? If s were to fall to 0.03 because of an exogenous shock, how would the unemployment rate change in the short run? In the long run?
Consider the model of unemployment with job separation rate s = 0.05 and job finding rate f = 0.20. If the unemployment rate U = 10,000, L = 200,000, and E = 190,000 then what will the natural rate of unemployment be? Please show your calculation. If U were to fall to 5,000 because of an exogenous shock, how would the unemployment rate change in the short run? In the long run? If s were to fall to 0.03 because of an exogenous shock, how would the unemployment rate change in the short run? In the long run?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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- Consider the model of
unemployment with job separation rate s = 0.05 and job finding rate f = 0.20.
- If the unemployment rate U = 10,000, L = 200,000, and E = 190,000 then what will the natural rate of unemployment be? Please show your calculation.
- If U were to fall to 5,000 because of an exogenous shock, how would the unemployment rate change in the short run? In the long run?
- If s were to fall to 0.03 because of an exogenous shock, how would the unemployment rate change in the short run? In the long run?
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