A labour market has 50,000 people in the labour force. Each month, a fraction p of employed workers become unemployed (0 < p < 1) and a fraction q of unemployed workers become employed (0 < q < 1).

• What is the steady-state unemployment rate?

• Under the steady-state, how many of the 50,000 in the labour force are employed and how many are employed each month? How many of the unemployed become employed each month?

• Suppose p = 0.08 and q = 0.32. What is the steady-state unemployment rate and how many workers move from employment to unemployment each month?