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F412:19 3198= .. . 88% owl.uwo.ca Page 9 of 18 QUESTION 8 (10 marks) Consider a population of 140 million people where they are either
F412:19 3198= .. . 88% owl.uwo.ca Page 9 of 18 QUESTION 8 (10 marks) Consider a population of 140 million people where they are either employed or unemployed. (No one is out of the labour force.) The monthly exit rate from unemployment h is 38 percent, and the monthly separation rate from employment s is 2 percent. a) Use the two rates, h and s, to compute the steady-state unemployment rate u*. b) In the steady state, people are employed, and people are unemployed. c) In the steady state, how many people exit unemployment to enter employment in a month? Page 10 of 18
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