Question

During the course of a​ year, the labor force consists of the same 1,165 people. Of​ these 22 lack skills that employers desire and hence remain unemployed throughout the year. At the same​ time, every month during the​ year, 24 different people become​unemployed, and 24 other different people who were unemployed find jobs. There is no cyclical unemployment.

c. Suppose that a system of unemployment compensation is established. Each​ month, 24 new people​ (not including the 22 lacking required​ skills) continue to become​ unemployed, but each monthly group of newly unemployed now takes two months to find a job. Calculate the frictional unemployment rate after this change.

_______​%.

d. After the change discussed in part ​(c​),calculate the unemployment rate.

__________​%.

​(Enter your response as a percentage rounded to two decimal​ places).

Answer 1

Answer C.) Suppose that a system of unemployment compensation is established. Each​ month, 24 new people​ (not including the 22 lacking required​ skills) continue to become​ unemployed, but each monthly group of newly unemployed now takes two months to find a job. So every month there are 24 unemployed and 24 new unemployed.

The frictional unemployment rate after this change = (24 + 24) /1165 × 100 = 4.12%

Answer d.) After the change discussed in part C, the unemployment rate will be = (48 + 22) /1165 × 100=6.01% or 6 %