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In a particular economy the labour force (the sum of employed and unemployed workers) is fixed at 100 million. In this economy, each month one percent of the workers who were employed at the beginning of the month loses their jobs, and 19 percent of the workers who were unemployed at the beginning of the month find new jobs.
1. The January unemployment rate is 5 percent. For the rates of job loss and job finding given, what will the unemployment rate be in February? In March?
I know that for both months the percentage remains unchanged at 5 percent however I cannot figure out the percentage for the following questions:
In April an adverse productivity shock raises the job loss rate to three percent of those employed. The job loss rate returns to one percent in May, while the job finding rate remains unchanged at 19% throughout. Discover the unemployment rate for April, May, June, and July.
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