If the steady-state unemployment rate for an economy is 5%, and each period 2% of employed workers lose their jobs, what percent of unemployed workers find employment each period? A) 1% B) 2% C) 3% D) 4%
To maintain a steady-state unemployment rate of 5%, the percentage of unemployed workers finding employment each period must be equal to the percentage of employed workers losing their jobs.
Since 2% of employed workers lose their jobs each period, the percentage of unemployed workers finding employment each period must also be 2%.
Therefore, the correct answer is B) 2%.
To find the percent of unemployed workers who find employment each period, we need to subtract the percentage of workers who lose their jobs from the steady-state unemployment rate.
The percentage of workers who lose their jobs each period is 2%.
The steady-state unemployment rate is 5%.
Therefore, the percent of unemployed workers who find employment each period is given by:
Percent of unemployed workers finding employment = Steady-state unemployment rate - Percentage of workers losing jobs
Percent of unemployed workers finding employment = 5% - 2%
Percent of unemployed workers finding employment = 3%
So, the answer is C) 3%.
To find out what percent of unemployed workers find employment each period, we need to calculate the difference between the rate at which workers lose their jobs and the steady-state unemployment rate.
In this case, the rate at which workers lose their jobs each period is 2%, and the steady-state unemployment rate is 5%.
To find the percent of unemployed workers who find employment each period, we subtract the rate at which workers lose their jobs from the steady-state unemployment rate:
Percent of unemployed workers finding employment = Steady-state unemployment rate - Rate at which workers lose their jobs
Percent of unemployed workers finding employment = 5% - 2%
Percent of unemployed workers finding employment = 3%
Therefore, the answer is C) 3%.