Suppose that in any given period an unemployed person will find a job with probability .6...

Suppose that in any given period an unemployed person will find a job with probability .6 and will therefore remain unemployed with a probability of .4. Additionally, persons who find themselves employed in any given period may lose their job with a probability of .3 and will have a .7 probability of remaining employed.
1. Set up the Markov transition matrix for this problem
2. There are 1000 people in the economy. At period 0, half of the
  
  population is unemployed, what will be the number of unemployed
  
  people after 1 period?
3. What will be the number of unemployed people after 4 period?
4. What is the steady-state level of unemployment?

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Expert Solution

Colby Messinger answered 9 months ago

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