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The Natural Rate of Unemployment Suppose there are 45,000 workers (constant), and 4500 of them are currently unemployed. The current rate of job separation is

  1. The Natural Rate of UnemploymentSuppose there are 45,000 workers (constant), and 4500 of them are currently unemployed.

The current rate of job separation is 2 percent, while the rate of job finding is 18 percent.

  1. What is the unemployment rate?
  2. How many workers are expected to lose their jobs this month?
  3. How many workers are expected to find jobs this month?
  4. Based on parts b and c, what is the unemployment rate next month?

Suppose that the government develops a website (www.Monstrosity.com) that allows workers

to post their resumes and allows employers to view them for free. The program immediately

improves the rate of job finding to 23 percent. We start with the unemployment rate from #1 on

the previous section.

  1. How many employed workers will leave their jobs this month?
  2. How many unemployed will find a job this month?
  3. What is the unemployment rate next month?
  4. What is the unemployment rate two months from now?
  5. What is the new natural rate of unemployment in this economy?

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