Question

Suppose that in both Europe and the U.S., s = 0.01 where s is the job separation rate. The job accession rate a is 0.19 in the U.S. but 0.11 in Europe. What is the natural unemployment rate in Europe? (Give your answer as a decimal with 3 decimal places

Answer 1

The natural unemployment rate in Europe can be calculated using the job separation rate and the job accession rate. With s = 0.01 and a = 0.11 in Europe, the natural unemployment rate would be 8.3%.

Step-by-step explanation:

The natural unemployment rate in Europe can be calculated using the job separation rate (s) and the job accession rate (a). In this case, s = 0.01 and a = 0.11 in Europe. The formula to calculate the natural unemployment rate is s / (s + a). Plugging in the values, the natural unemployment rate in Europe would be 0.01 / (0.01 + 0.11) = 0.083 or 8.3% (rounded to three decimal places).