Question

If the steady-state rate of unemployment equals 0.20 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:

Answer 1

The steady rate of unemployment is 0.2(ie 2/10)
And the fraction of employees that lose their job is 0.02(ie 2/100)
Let's say the total mass is a 100
Therefore 2 people lose their job every month
And the amount of unemployed is

`(2 / 10) * 100 = 20`
So, 20 - 2=18
And the fraction of unemployed that get a job monthly is

`18 / 100 = 0.18`