Suppose that the labor force is fixed at 10 million people, of whom 1 million are unemployed. Assume that the job-separation rate is 2% per month and the job-finding rate is 40% per month.  a. Trace out (numerically and graphically) the time path of emplo

Suppose that the labor force is fixed at 10 million people, of whom 1 million are unemployed. Assume that the job-separation rate is 2% per month and the job-finding rate is 40% per month. a. Trace out (numerically and graphically) the time path of emplo

Suppose that the labor force is fixed at 10 million people, of whom 1 million are unemployed. Assume that the job-separation rate is 2% per month and the job-finding rate is 40% per month.

a. Trace out (numerically and graphically) the time path of employment and unemployment during the first two years.

b. What is the natural unemployment rate?


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