a. Show that the unemployment rate, ur, is related to the employment rate, er, and labour force participation rate, pr, as follows:

b. Suppose the labour market is in equilibrium when the labour force participation rate is 0.60 and the employment rate is 0.55. What is the unemployment rate in this economy?

c. Suppose that an increase in employment insurance benefits causes the participation rate to increase to 0.61. What would be the effect on the unemployment rate? Use a diagram to illustrate your answer and explain your assumptions.

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ur=1 er pr,