Consider an economy with U unemployed people, N employed people and O people not in the labor force. In a given period, a share f of the employed get fired, a share h of the unemployed get hired and become employed, a share d of the unemployed gets discouraged and drops out of the labor force and a share j of the those outside the labor force start looking for a job and become unemployed. Nobody from outside the labor force gets hired directly into a job, nor does anybody who quits employment immediately drop out of the labor force. 1. Draw the stocks of different pools of the population and the flows between them in a convenient diagram.

Macroeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter8: Economic Fluctuations, Unemployment, And Inflation
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Consider an economy with U unemployed people, N employed people and O people not in the labor force. In a given period, a share f of the employed get fired, a share h of the unemployed get hired and become employed, a share d of the unemployed gets discouraged and drops out of the labor force and a share j of the those outside the labor force start looking for a job and become unemployed. Nobody from outside the labor force gets hired directly into a job, nor does anybody who quits employment immediately drop out of the labor force.

1. Draw the stocks of different pools of the population and the flows between them in a convenient diagram.

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