If the steady-state rate of unemployment equals 0.10 and the fraction of employed workers who...
Question:
If the steady-state rate of unemployment equals 0.10 and the fraction of employed workers who lose their jobs each month (the rate of job separations) is 0.02, then the fraction of unemployed workers who find jobs each month (the rate of job findings) must be:
a) 0.02
b) 0.08
c) 0.10
d) 0.18
Unemployment Rate
The number of people in the labor force who are unemployed and actively looking for work constitutes the number of unemployed people. The percentage of people in the labor force who are unemployed or actively looking for a job is called the unemployment rate.
Answer and Explanation: 1
The correct answer is d) 0.18
In the above question, we are given the unemployment rate as 0.1, the separation rate as 0.02, and we have to find the rate of job finding.
Now,
{eq}{\rm{Unemployment}}\;{\rm{Rate}} = \frac{{{\rm{Job}}\;{\rm{Separation}}\;{\rm{Rate}}}}{{{\rm{Job}}\;{\rm{Separation}}\;{\rm{Rate}} + {\rm{Job}}\;{\rm{Finding}}\;{\rm{Rate}}}} {/eq}
Let, the job-finding rate be X. Therefore,
{eq}\begin{align*} 0.1 &= \frac{{0.02}}{{0.02 + {\rm{X}}}}\\ 0.002 + 0.1{\rm{X}} &= 0.02\\ 0.1{\rm{X}} &= 0.018\\ {\rm{X}} &= 0.18 \end{align*} {/eq}
Therefore, the job-finding rate is 0.18.
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Why the Unemployment Rate Decreases and Increases
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Chapter 6 / Lesson 2
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Unemployment rates are an important indicator of the economy. This lesson will explore what defines unemployment, why unemployment rates change, the way unemployment is calculated, and look at the three types of unemployment.
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