Question

Explain why a policy aimed at lowering the natural rate of
unemployment given by the steady state model must either reduce the
rate of job separation or increase the rate of jobs finding

Answer #1

The natural rate of unemployment is a mix of frictional and structural unemployment that persists in an efficient, expanding economy when labor and resource markets are in equilibrium.

In the steady state model,

Steady state condition is defined by when-

**No. of people who loss or leave their jobs = No. of
people who finds employment**

Assuming s = rate of job separation, f = rate of finding new job, U = no. of unemployed people, E = no. of employed people

L = total labor force and r = U/L is the unemployment rate.

Using steady state condition,

Thus natural rate of unemployment is given by

Thus to reduce the natural rate of unemployment, either
*f* (*rate of job finding*) should be increased or
*s*(*rate of job separation*) should be
decreased.

If the economy were at a steady-state unemployment rate with a
separation rate of .02 per month and a job-?nding rate of .10 per
month and the labor force was 100 million.
PART A. What is the natural unemployment rate? How many
individuals would lose their jobs
each month?
PART B. Suppose the job separation rate is still .02 per month
and the rate of job ?nding is
now .13 per month. What is the natural unemployment rate? How
many...

This question refers to the job search model of the natural rate
of unemployment that we covered in the additional material to
chapter 15. Suppose the economy is in a long-term equilibrium (at a
steady-state unemployment rate), with a separation rate of 0.03 per
month and a job finding rate of 0.12 per month. Assume the labor
force is 200 million people. In equilibrium, how many individuals
lose their jobs each month?

Reducing the natural rate of unemployment requires reducing the
rate of job separation and increasing the rate of job finding.
Explain at least one policy that will impact each of these aspects
of the natural rate of unemployment.

Suppose that unemployed workers find jobs at the rate of 15% per
period and the job separation rate for employed workers is 5% per
period. Assume the size of the labor force is fi xed at 1000. At
period t=0, number of unemployed U0 = 200 and employed E0 =
800.Starting from the steady state where the unemployment rate is
at its natural rate, suppose that suddenly the job finding rate
falls to 10% and separation rises to 8%, what...

3.
Assume that
the unemployment dynamics in the U.S. are represented by the
following equations:
LF = U +
E
ΔU =
s(E) – f(U),
Where LF
stands for Labor Force, s is the separation rate (the rate at which
those employed separate from their jobs), and f is the finding rate
(the rate at which those unemployed find a new job). Assume that LF
= 1,000. Separation rate (s) = 5%, and finding rate (f) = 4%. Solve
the...

1. Consider a model of unemployment where the changes in the
unemployment rate (u) is given by ?u=(b+s)-(b+s+f)u, where b is the
rate of entry in the labor force, s is the seperation rate and f is
the job findings rate. a. Derive an expression for the steady-state
unemployment rate u*.

. Some economists explain why the natural rate of unemployment
decreased from the 1980s in the U.S. with the following factors:
“increasing globalization and competition; changing nature of labor
market; the aging of the U.S. population; increase in the
incarceration rate, increase in the number of workers in
disability.” Write a short essay that explains (a) only the meaning
of “increasing globalization and competition” and “changing nature
of labor market” and (b) how they affect wage-setting relation
[W/P=F (u, z)],...

Use the theories of job rationing and job search to explain why
the natural rate of unemployment in the United States is lower than
that in France. What can the French government do to try to remedy
this situation? Might these remedies be politically unpopular?

In 2008, the unemployment rate (u) was ten
percent, and the natural rate of unemployment
(nru) was six percent.
Again using Okun's Law, what was the percentage GDP gap then?
Show your computation. (ii) State your answer in
words, comparing actual to potential output. (iii)
What is the sign of the GDP gap then? (iv) Why is
the sign of the GDP gap in 2008 the opposite of the sign of the
current GDP gap? Explain.

Assume that a country's economy run equilibrium and the actual
unemployment lower than the natural rate of unemployment
A)This economy is in what state
1 Where is the current output level, in relation to full
employment
2 is thete inflation in this economy Why or Why not
B)What open-market operation can the country's central bank use
to move the economy toward its long-run equilibrium
C)As a result of that action above what happens to the Money
Supply and equilibrium nominal...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 26 minutes ago

asked 31 minutes ago

asked 55 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago