Decrease national savings by 80, and increase the real interest rate. If sE is less than fU, the unemployment rate will decrease over time. The U.S. probably has a higher unemployment rate than Europe because s is low in the U.S. relative to Europe. An unintended consequence of unemployment insurance is shorter unemployment duration. The threat of unionization by workers can create wait unemployment.
Frictional unemployment is caused by the time it takes to find another job.
All of the above. Accommodating the shock. Answer all of the following questions. The points for each question are as indicated. If you need extra space, use the back of the exam.