The steady-state rate of unemployment is ul ssf suppose


The steady-state rate of unemployment is U/L = s/(s+f). Suppose that the unemployment rate does not begin at this level. Show that the unemployment rate will evolve over time and reach this steady state. (Hint: Express the change in the number of unemployed as a function of s,f, and U. Then show that if unemployment is above the natural rate, unemployment falls, and if unemployment is below the natural rate, unemployment rises.)

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Business Economics: The steady-state rate of unemployment is ul ssf suppose
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