1. Using the 2-sided search model from Chapter 6, assume that policymakers eliminate Unemployment Insurance of amount b, and instead give a production subsidy that raises match surplus by the same amount b.

point: the direction of change relative to the initial equilibrium.

point: the intuition (not math) explaining this change.

for each of the following four variables: i. Real wages ii. Unemployment rate iii. GDP iv. Government expenditures

b. 1 point total:

Do you think this would be a good policy change? (1/2 point)

Provide a brief economic explanation (1/2 point).

2. Using the 2-sided search model from Chapter 6, assume that policymakers eliminate Unemployment Insurance b and instead give a Universal Basic Income of the same amount b to all households, no matter whether they are in the labor force, working, or unemployed.

point: the direction of change relative to the initial equilibrium.

point: the intuition (not math) explaining this change.

for each of the following four variables: i. Real wages ii. Unemployment rate iii. GDP iv. Government expenditures

b. 1 point total:

Do you think this would be a good policy change? (1/2 point)

Provide a brief economic explanation (1/2 point).

3. Using the 2-sided search model from Chapter 6, assume that policymakers eliminate Unemployment Insurance b, and instead give a wage subsidy equal to the same amount b but now give it as a wage subsidy rather than as unemployment insurance.

point: the direction of change relative to the initial equilibrium.

point: the intuition (not math) explaining this change.

for each of the following four variables: i. Real wages ii. Unemployment rate iii. GDP iv. Government expenditures

b. 1 point total:

Do you think this would be a good policy change? (1/2 point)

Provide a brief economic explanation (1/2 point).