Consider the bathtub model of unemployment

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Consider the bathtub model of unemployment. Let E= 45 million and U= 15 million.

(a) If in the next month, the job separation rate is equal to 0.04 and the job finding rate is 0.3, what is the number of unemployed individuals next month?

(b) If over the past ten years the average separation rate, S= 0.02 and the average job finding rate, f= 0.25, what is the natural unemployment rate?

Reference no: EM131169396

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