1)

a) Suppose in an economy 3% of workers lose their jobs each month while about 37% of unemployed workers found a job. What is the natural rate of unemployment for this economy?

b) Suppose for some reason the rate of finding a job were to fall from 37% to 35%, how would this change your answer to part a)

c) You read a news report that says number of employed is 50 million people. What must be the number of unemployed and the labor force for this economy (use the numbers from part a)?

d) You read a news story that explains the government is increasing the generosity of unemployment benefits. Briefly explain how this will affect the natural rate of unemployment.