8) 20 pts. Suppose that, as in the model presented in class, The total labor...
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8) 20 pts. Suppose that, as in the model presented in class, The total labor force L is made up of employed people and unemployed people. U is the total number of unemployed people. E is the total number of employed people. The unemployment rate is u=U/L. The number of employed people losing jobs in a period is sE where s is a fraction (between zero and one). The number of unemployed people finding jobs in a period is fU where f is a fraction (between zero and one). But unlike the model presented in class, the size of the labor force is not fixed. Instead, it is growing. In every period, there are new entrants to the labor force. New entrants enter the pool of unemployed, just like the existing workers who become unemployed in that period. The number of new entrants to the labor force in a period is equal to gL where g is a fraction between zero and one, and L is the size of the labor force in that period. Derive the long-run equilibrium value of the unemployment rate u. Show your work
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