How many workers are demanded and employed now

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Reference no: EM131169403

Let's assume production is given by Yt=AK^(1/3)L^(2/3). Capital stock has reached its steady state at K= 1000 and A= 3/2. Assume there are no frictions/rigidities unless otherwise stated. There are L= 1000 workers who supply labor inelastically (this means they don’t care about leisure/there is no disutility from working).

(a) What does our long-run model say the level of unemployment (Ut) is? What about the unemployment rate (ut)?

(b) How many workers are demanded and employed now?

Reference no: EM131169403

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