The country of Coronia has a labour force ( ) of 40 million people. Of these 3 million are unemployed ( ), and the rest employed ( ). The rate of job loss for those in work is , whereas the hiring rate for those without jobs is .

a)Explain what the natural rate of unemployment is and derive an expression for it in terms of and . Find the natural rate of unemployment for Coronia. [6 marks]

b)Is unemployment in Coronia at the natural rate? If not, will Coronia converge to the natural rate over time? [6 marks]

c)Many governments have introduced 'furlough schemes' during the coronavirus pandemic. Through these schemes, governments pay the wages of many millions of people who are unable to work due to lockdowns and are put on leave (are furloughed) by their employer.

How are furlough schemes likely to affect the natural rate of unemployment in these countries during the coronavirus pandemic and after the schemes end? [6 marks]

d)During the coronavirus pandemic many part-time employees, especially women, left the labour force to take on home schooling responsibilities. How might this affect the current unemployment rate? [6 marks]

e)Repeated lockdowns have had the effect of closing restaurants, bars and shops, as well as restricting travel. How might lockdown affect unemployment and what type of unemployment is affected? [6 marks]