If s is the rate of job separation, f is the rate of job finding, and both rates are constant, then the unemployment rate is approximately:
A) f/(f + s).
B) (f + s)/f.
C) s/(s + f).
D) (s + f)/s.

Question

Quizplus · Accepted Answer

The unemployment rate is the ratio of the number of unemployed individuals (those who have lost their job and are actively seeking new employment) to the total labor force (employed plus unemployed individuals). Since both job separation and job finding are constant rates, the number of unemployed individuals will be proportional to the rate of job separation (s), while the total labor force is proportional to the sum of job separation and job finding (s + f). Therefore, the unemployment rate is approximately s/(s + f).

If S Is the Rate of Job Separation, F Is