Question
Compute the equilibrium market tightness j, the unemployment rate u , and the vacancy rate v . [07 marks] Compute the expected payoff from the
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Compute the equilibrium market tightness j, the unemployment rate u, and the vacancy rate v. [07 marks]
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Compute the expected payoff from the job search W and deduce the equilibrium number of job searchers Q. [05 marks]
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How many vacancies are initially posted? How many consumers are employed in this economy? What is the aggregate production? [05 marks]
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Compute the equilibrium wage. [05 marks]
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Assume the government sets the wage 10% above its equilibrium value. What will be the
unemployment rate and how does it compare to the initial one? [05 marks]
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Assume the economy is at the equilibrium of Question 1), compute the percentage change in the matching efficiency e that is needed to reduce the unemployment rate by 10%. [08 marks]
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