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?

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question
  1. 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?
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 5 steps with 10 images

Blurred answer
Knowledge Booster
Inflation and Unemployment
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education