2 Matching functionsIn this section, we'll think more about where the finding rate comes from. Vtare the number of vacancies and Ut are the number of unemployed searchers. Ifm(Ut, Vt) is a matching function11. How do the above variables and functions (U, V, m(U, V)) predict the jobfinding rate?=2. Let the matching function be m(U, V) = 0.5 * 0.5 10.5. Suppose, U₁4, V₁ = 1 what is the job finding rate of an unemployed worker?3. Suppose the separation rate is s₁ = 0.05, what is the steady state unem-ployment rate, given the finding rate from above?4. Suppose that the labor market is in steady state. Then V goes from 1 to4, what will be the new finding rate? What does this predict about thenext period's unemployment rate?

Given data Matching function m(u,v)=0.5*U0.5V0.5 u---number of unemployed v--- job vacancies…

Answered: In this section, we'll think more about…

In this section, we'll think more about where the finding rate comes from. Vt are the number of vacancies and Ut are the number of unemployed searchers. If m(Ut, Vt) is a matching function 1

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Chapter1: Making Economics Decisions

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Question

2 Matching functions
In this section, we'll think more about where the finding rate comes from. Vt
are the number of vacancies and Ut are the number of unemployed searchers. If
m(Ut, Vt) is a matching function
1
1. How do the above variables and functions (U, V, m(U, V)) predict the job
finding rate?
=
2. Let the matching function be m(U, V) = 0.5 * 0.5 10.5. Suppose, U₁
4, V₁ = 1 what is the job finding rate of an unemployed worker?
3. Suppose the separation rate is s₁ = 0.05, what is the steady state unem-
ployment rate, given the finding rate from above?
4. Suppose that the labor market is in steady state. Then V goes from 1 to
4, what will be the new finding rate? What does this predict about the
next period's unemployment rate?

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