Consider an economy where workers can be either employed or unemployed. If the job separation rate is four times the magnitude of the job finding rate then which of the following can be true.

a. The steady state unemployment rate is 0.8

b. The steady state employment rate is 0.2

c. The labour force has 2000 people and 400 employed

d. All of the above

Consider a simple Keynesian model with taxation. Suppose the marginal rate of tax is 0.2 and the marginal propensity to consume is 0.5. Then a decrease in investment expenditure of 100 units will:

a. Decrease equilibrium output by approximately 200 units

b. Increase equilibrium output by approximately 150 units

c. Increase equilibrium output by approximately 167 units

d. None of the above