Question: could you please explain part a 1. (22 points) The bathtub model of unemployment revisited - Lt is the labor force, Ut is the number

could you please explain part a

could you please explain part a 1. (22 points) The bathtub model

1. (22 points) The bathtub model of unemployment revisited - Lt is the labor force, Ut is the number of unemployed workers and Et the number of employed workers in period t. The separation rate and the job finding rate in period t are correspondingly st and ft. Assume that Lt+1 = (1 + n) Lt and a share dt of the new workers, Litt1 - Lt, are employed immediately as they enter the labor force. (a) (6 points) Write and explain the equation describing the level of unemployment in period t+ 1, Utti, as a function of current unemployment, Ut, current employ- ment, Et, and increase in the labor force, Ltti - Lt- (b) (6 points) Use the above equation to derive a law of motion for unemployment rate, an equation relating next period's unemployment rate, ut+1, to the current period's unemployment rate, ut. (c) (6 points) Compute the steady-state level of the unemployment rate, u*. (d) (4 points) Explain the role of s and of f in determining the steady-state level of the unemployment rate, u*

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