Consider an economy with 500 people in the labor force. At the beginning of every month, 5 people lose their jobs and remain unemployed for exactly one month; one month later, they find new jobs and become employed. In addition, on January 1 of each year, 20 people lose their jobs and remain unemployed for six months before finding new jobs. Finally, on July 1 of each year, 20 people lose their jobs and remain unemployed for six months before finding new jobs.

a. What is the unemployment rate in this economy in a typical month?
b. What fraction of unemployment spells lasts for one month? What fraction lasts for six months?
c. What is the average duration of a completed spell of unemployment?
d. On any particular date, what fraction of the unemployed are suffering a long spell (six months) of unemployment?

a) 5%

b) 0.60 0.40

c) 3months

d) 80%

Explanation:

The solution is attached in the picture below

being born in poverty would limit the people's chances, opportunities and benefits.

this happen because of several things, such as:

- poor people tend to gain less access to good education and nutrition. this mean that their chance to obtain high paying jobs would also be limited.

- poor people tend to socialize with other poor people while the rich tend to socialize with other rich people. this means that simply throguh their social circle, rich people would have more business opportunities compared to the poor people.

- rich people tend to have more capital in their disposal. this would benefit them in business since it is far easier for them to fund their business operation compared to poor people.

government control and resources