If the economy has reached a steady- state level of unemployment then which of following is not true? A. the rate of job finding and the rate of job separation are the same B. the Unemployment rate is constant C. the Unemployment rate is given by the fraction of the labor force that is unemployed D. the number of unemployed who find jobs equals the number of employed who become separated from their jobs.

If the economy has reached a steady- state level of unemployment then which of following is not true?
A. the rate of job finding and the rate of job separation are the same
B. the Unemployment rate is constant
C. the Unemployment rate is given by the fraction of the labor force that is unemployed
D. the number of unemployed who find jobs equals the number of employed who become separated from their jobs.

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Answer

• C. the Unemployment rate is given by the fraction of the labor force that is unemployed
  Explanation:
  Steady-state level of unemployment is also called the natural rate of unemployment. This indicates the average rate of unemployment at which the economy fluctuates. If the rate of unemployment is constant, then the unemployment is at steady-state.
  s*E = f*U = This model indicates that in steady-state unemployment, the number of people finding new jobs is equal to the number of people getting separated from their jobs. Unemployment rate in a steady-state unemployment includes only the frictionally unemployed and the structurally unemployed. IN other words, to find the rate of unemployment, divide the sum of structurally unemployed and frictionally unemployed, divided by the total labor force.

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