Let u denote the unemploymentrate, f the job-finding rate, and s the separation rate. The law ofmotion for the unemployment rate is (whereΔυ Ut+1 ut is the change in theunemployment rate):Au suf (1 – u)Au fu - s (1 – u)Au = su + f(1 – u)=Au = s (1 – u) – fuAu = fu+ s (1 – u)

Here we are given the scenario of employment. And there some changes happening and hence we will be…

Answered: Let u denote the unemployment rate, f…

Let u denote the unemployment rate, f the job- finding rate, and s the separation rate. The law of motion for the unemployment rate is (where ut is the change in the Au = Ut+1 unemployment rate):

Macroeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506756

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter8: Economic Fluctuations, Unemployment, And Inflation

Section: Chapter Questions

Problem 5CQ

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Question

Let u denote the unemployment
rate, f the job-
finding rate, and s the separation rate. The law of
motion for the unemployment rate is (where
Δυ Ut+1 ut is the change in the
unemployment rate):
Au suf (1 – u)
Au fu - s (1 – u)
Au = su + f(1 – u)
=
Au = s (1 – u) – fu
Au = fu+ s (1 – u)

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