If the steady-state unemployment rate for an economy is 5%, and each period 2% of employed workers lose their jobs, what percent of unemployed workers find employment each period? A) 1% B) 2% C) 3% D) 4%

Answer 1

To maintain a steady-state unemployment rate of 5%, the percentage of unemployed workers finding employment each period must be equal to the percentage of employed workers losing their jobs.

Since 2% of employed workers lose their jobs each period, the percentage of unemployed workers finding employment each period must also be 2%.

Therefore, the correct answer is B) 2%.