If the steady-state rate of unemployment equals 0.125 and the fraction of unemployed workers who find jobs each month (the rate of job findings) is 0.56, then the fraction of employed workers who lose their jobs each month (the rate of job separations) must be:
A)0.08.
B)0.125.
C)0.22.
D)0.435.

Question

Quizplus · Accepted Answer

The steady-state rate of unemployment (u) is given by the formula u = s / (s + f), where s is the rate of job separations and f is the rate of job findings. Plugging in the values, 0.125 = s / (s + 0.56). Solving for s gives s = 0.08.

If the Steady-State Rate of Unemployment Equals 0