Assume in 2019 the rate of job separation is 1% and the rate of job finding...

Assume in 2019 the rate of job separation is 1% and the rate of job finding is 19%. In 2020 during a recession, 85 out of every 1000 employed workers become separated from their jobs while 21 out of every 100 unemployed workers find jobs.

a. what is the natural rate of unemployment during the recession?

b. what is the percent change in the unemployment rate between 2019 and 2020?

c. describe a governmental program that will decrease the unemployment rate

Solutions

Expert Solution

a. Natural Rate of Unemployment = s / (s + f)

where s = job separation rate

f = job finding rate

Natural Rate of Unemployment during ressesion = 8.5 / (8.5 + 21)

= 0.288

Unemployment Rate in 2019 = 1 / (1+19)

= 0.05

% change in unemployment = (Unemployment in 2020 - Unemployment in 2019) / Unemployment in 2019

= (0.288- 0.05) / 0.05

= 4.76

Unemployment rate can be decrease if it is able to lower s and increase f.

The government can give unemployment insurance to the workers. Insurance pays a part of the worker's former wages for a limited time period after they lose jobs. It will reduce the opportunity cost of searching new job. And helps in controlling the unemployment rate.

Federal Government of USA is currently giving people affected by COVID 19 unemployment insurance to control the rate in the economy.

**if you liked the answer, then please upvote. Would be motivating for me, Thanks

Rahul Sunny answered 1 week ago

Next > < Previous

Related Solutions

A. Assume the rate of job finding is 25% and the rate of job separation is...

A. Assume the rate of job finding is 25% and the rate of job separation is 10%, the natural rate of unemployment is ___%. (Round your answer to 1 decimal place.) B. Assume the rate of job finding is 25% and the rate of job separation is 10%. If the rate of job separation falls to 5%, the new natural rate of unemployment is ___%. (Round your answer to 1 decimal place.) C. Assume the rate of job finding is...

If the rate of job separation is 1% and the rate of job finding is 10%,...

If the rate of job separation is 1% and the rate of job finding is 10%, the natural rate of unemployment is, approximately equal to Question options: 9% 1% 10% 90% none of the above

Assume, as in the example in the book, that the job separation rate s is 0.01...

Assume, as in the example in the book, that the job separation rate s is 0.01 (1%) per month and that the job finding rate f is 0.2 (20%) per month. Assume that the labor force is 100 million. (a) What is the steady state unemployment rate for this economy? (b) Given that L = 100 million, what is the steady state number of employed E and unemployed U ? (c) If U.S. immigration policy changed today (period t =...

1-In the economy of Australia, the rate of separation from the job is 10%, while the...

1-In the economy of Australia, the rate of separation from the job is 10%, while the probability of finding a job among unemployed is 18%. The steady state level of unemployment is * 2-In a small open economy, if exports equal $5 billion and imports equal $7 billion, then there is a trade _______ and _______ net capital outflow * 3-In a small open economy, the interest rate is determined by the * 4-Suppose that foreign countries begin to subsidize...

1. During recessions, the job finding rate tends to ["decline", "remain constant", "rise"], while the job...

1. During recessions, the job finding rate tends to ["decline", "remain constant", "rise"], while the job separation rate ["declines", "rises", "remains constant"]. 2. When firms open more job positions, the labor market becomes ["tighter", "less tight"], the job-finding rate ["remains constant", "declines", "rises"], and the unemployment rate ["rises", "declines", "remains constant"]. 3. The natural unemployment rate describes the unemployment rate when a) frictional unemployment is 0. b) real GDP is equal to potential GDP. c) cyclical unemployment is positive. d)...

1-Workforce planning is about finding the ______ employee, with the _ skills for the ______ job....

1-Workforce planning is about finding the __________ employee, with the _________ skills for the __________ job. 2- Labor demands refer to the availability of current or potential employees to perform a company's jobs. True False 3- List two ways in which hiring managers can quantify the applicant. 4-There is a visible and invisible organizational culture. True False

Assume that the inflation rate in 2019 was about 16.00%, while the 1-yr Treasury bill issued...

Assume that the inflation rate in 2019 was about 16.00%, while the 1-yr Treasury bill issued at the start of that year offered a nominal rate of 10.00%. Which of the following statements is correct? Group of answer choices Investors in these bonds decreased their purchasing power by 5.17%. Purchasing power of money stayed the same over time. The true increase in purchasing power that resulted from investing in these bonds was 10.00%. Investors in these bonds increased their purchasing...

5. Assume the following interest rates Current Rate on a 1-year bond due in 2019: 4%...

5. Assume the following interest rates Current Rate on a 1-year bond due in 2019: 4% Expected Rate on a 1-year bond due in 2020: 5% Expected Rate on a 1-year bond due in 2021: 6% Expected Rate on a 1-year bond due in 2022: 4% Expected Rate on a 1-year bond due in 2023: 2% a. According to the expectations theory for the yield curve, what would be the current rate on a 3-year bond due in 2021? Show...

5. Assume the following interest rates Current Rate on a 1-year bond due in 2019: 4%...

Requesting Innocent Spouse Relief (2019) 1 What conditions make a taxpayer ineligible for separation of liability?...

Requesting Innocent Spouse Relief (2019) 1 What conditions make a taxpayer ineligible for separation of liability? a Actual knowledge of the deficiency. b Transfer of assets between spouses. b Both A and B. d Neither A nor B.

Subjects