Question: a. Suppose the layoff rate is 0.02 and the average duration of a spell of unemployment is four and one-half months. Using Equation 10.4,

a. Suppose the layoff rate is 0.02 and the average duration of

a. Suppose the layoff rate is 0.02 and the average duration of a spell of unemployment is four and one-half months. Using Equation 10.4, what is the equilibrium unemployment rate in this economy? b. Suppose that an increase in employment insurance benefits causes the separation rate to increase to 0.021. What would be the effect on the unemployment rate and why would it change? c. Suppose that an increase in employment insurance benefits causes the average duration of a spell of unemployment to increase by one week. What would be the effect on the unemployment rate and why would it change?

Step by Step Solution

★★★★★

3.35 Rating (155 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!

Blue Lagoon Corporation provides low-cost food delivery services to senior citizens. At the end of the year on December 31 , 2024, the company reports the following amounts: In addition, the company...

The empirical evidence on unemployment spell durations suggests that workers who leave unemployment earlier (that is, find or take a job sooner) have no higher post unemployment wages than do workers...

In New York State, an individuals unemployment benefits depend on her previous earnings the higher the earnings, the higher the benefits, up until a maximum benefit level is reached. In 1989, the...

Suppose the economy has a natural rate of unemployment of 6%. (a) Suppose short-run output over the next 4 years is +1%, 0%, -1%, and -2%. According to Okuns law, what unemployment rates would we...

On January 1 of the current year, Lean Co. made an investment of $10,000. The following is the present value of $1.00 discounted at a 10% interest rate: Present value of $1.00...

Tutors your help will be appreciated. SPli}.3 Transfer pricing Due to the expansion of business in Cogoland in recent years, SR Products has set up a marketing division there responsible for selling...

ll theparts of questions shd be well answered 6. (10) Consider the standard growth model in discrete time. There is a large number of identical households (normalized to 1). Each household wants to...

Questions. Eco 450 2 NATIONAL INCOME ACCOUNTING In Swedish: Nationalrakenskaper Problem 2.1: Fill in all numbers where there now are question marks (?) in the table. Private consumption (C) Privat...

4 Files 3:17 PM Fri May 13 Insert Draw Layout Review View Unit SMacroeconomic Policy Name: HR: POLICY BASICS Use the space below to take notes during class. The Federal Reserve: Monetary Policy:...

4 Files 3:18 PM Fri May '13 Insert Draw Layout Review View Unit SMacroeconomic Policy Name: HR: FISCAL POLICY Use the space below to take notes during class. Disposable Income: How does a change in...

1. In which phase of the business cycle is the U.S. economy currently in? ________________. How many months has the U.S. economy been in this stage of the business cycle? ___________ months 2. How...

Westerville Company reported the following results from last year's operations: Sales $1,800,000 435,000 Variable expenses Contribution margin Fixed expenses 1,365,000 1,005,000 Net operating income...

The Power at Ice Station Lion is supplied via solar cells. Once a year, a plane flies in and sells solar cells at a price of $20 per cell. Because of uncertainty about future power needs, the ice...

Saved Which of the following statements is correct regarding the admission of a new partner? Multiple Choice A new partner always pays book value. The right of co - ownership in the business property...

The circuit in Fig.1 is a voltage regulator utilizing an ideal op amp. (a) Find the output voltage of the circuit if the zener diode voltage is 5v. (b) What are the current in the zener diode and the...

How to calculate income elasticity (Ei), cross price elasticity (Exy) explain what the answers mean.

16. (Rotation) In figure, two 6.2 kg blocks are commected by a massless string over a pulley of radius 2.40 cm and rotational inertia 7.40 x 10-4 kg.m. The string does not slip on the pulley; it is...

Durkheim suggests that a society that holds together is characterized by its success at integrating its members well and at regulating human interactions well. Explain in 1000 words

which of the following are strategies to manage obsolescence during design and development

Comfort Now LA (CNL) was a small business that manufactured bleacher seat pads that sports fans or picnickers could use to make wooden outdoor seating (or even convenient rocks) a bit warmer and more...

1) Because Nationwide Horizons insurance company will not help pay for punitive damage awards, the directors are concerned whether an award of $20,000,000 would be compensatory, punitive, or some of...

Suppose that firm A has a low layoff rate while firm B has a high layoff rate. Assume both firms employ the same number of workers on average. Claim B: Under the current, partially experience rated...

Hi, I have some econ homework I need help with, it's 18 questions. I appreciate all you can help with Consider the aggregate demand-aggregate supply diagram below, which represents the macroeconomy....

Explain in details Problem 10.5. Suppose that the money demand function is: = Y -100. r, where r is the nominal interest rate=real interest rate in percent. Let Y=1000, and M=1000, and P=2. A. Graph...

What factors should be considered in deciding whether the cost of capital for a foreign affiliateshould be higher, lower, or the same as the cost of capital for a comparable domestic operation?...