The bathtub model of unemployment revisited - Lt is the labor force, Ut is the number of unemployed workers and Et the number of employed workers in period t. The separation rate and the job finding rate in period t are correspondingly st and ft. Assume that Lt+1 = (1 + n) Lt and a share dt of the new workers, Lt+1 Lt, are employed immediately as they enter the labor force. Write and explain the equation describing the level of unemployment in period t + 1, Ut+1; as a function of current unemployment, Ut, current employment, Et, and increase in the labor force, Lt+1 L

The following scenarios have been taken from actual answers to the Current Population Survey conducted by the Bureau of Labor Statistics. In each case classify the individual as either employed, unemployed, or not in the labor force. 1. Veronica attends Neptune Nigh School full-time. She also works part-time for pay at the North Star Cafe after school.

The labour market in an economy is characterised by the following equations: Wage setting: Price setting: W p² W Р = 0.9-0.5u = 1 1+µ -A In which W is nominal wages, pe and P are expected nominal prices and nominal prices, respectively, u is level of unemployment. µ is the price mark-up and λ is the marginal product of labour. Assume μ = 0.3 and λ = 1.1 Considering this information, which of the following statements are CORRECT: Improvement in working conditions will have no effects in the equilibrium level of unemployment in this economy. If this economy's actual output is below its potential output, there is pressure for real wages to decrease below 0.85 (i.e., W<0.85). If price marginal product of labour decreases to 1, the equilibrium real wage in this economy will decrease. A positive demand shock will change the equilibrium variables in this economy.

Scenario 1. Assume that frictional unemployment is 25; structural unemployment is 50; cyclical unemployment is 150; discouraged workers = 75; employed workers = 750; underemployed workers = 200. Use this information to answer the following 5 questions.Refer to Scenario 1.  What happens to the unemployment rate if discouraged workers were included in the labor force?   Question 16 options:   a)  The unemployment rate would decrease   b)  The unemployment rate could either increase or decrease   c)  Nothing, as discouraged workers are counted as unemployed.   d)  The unemployment rate would increase

The figure describes the effect of immigration on unemployment in the labour market. The labour market equilibrium is at A and C before and after the influx of immigration, respectively. Based on this figure, which of the following statements is correct? Real wage 40 20 3 3 Wage-setting curve (before immigration) B Wage-setting curve (after) immigration) Labour force (before Immigration) Price- setting curve Labour force (after immigration) 4 4.5 5 5.5 Employment, millions of workers 6 Firms claim a higher markup in the new equilibrium. The unemployment rate is unchanged in the new equilibrium. All incumbent workers are no worse off in the new equilibrium. All incumbent workers are unaffected while the labour market adjusts.