If the job separation rate is 0.02 and the job finding rate is 0.3, then the natural rate of unemployment is:
A)6.25%
B)15%
C)6.67%
D)none of the above.

Question

Quizplus · Accepted Answer

The natural rate of unemployment can be calculated using the formula: Natural Rate of Unemployment = s / (s + f), where s is the job separation rate and f is the job finding rate. Plugging in the given values, we get: 0.02 / (0.02 + 0.3) = 0.02 / 0.32 = 0.0625, which is 6.25%.

If the Job Separation Rate Is 0