The attached chart (Quits: Total Nonfarm) shows the quit rate (the number of who quit their job during the entire month as a percentage of total employment. (a) All else constant, what effect does an increase in the quit rate have on the unemployment rate? (b) Do you consider job quits as frictional or structural unemployment? Why? (c) What happens to the quit rate during the recession of 2007-08? Why?
The attached chart (Quits: Total Nonfarm) shows the quit rate (the number of who quit their job during the entire month as a percentage of total employment.
(a) All else constant, what effect does an increase in the quit rate have on the
(b) Do you consider job quits as frictional or structural unemployment? Why?
(c) What happens to the quit rate during the recession of 2007-08? Why?
(d) What happened to the unemployment rate during the recession of 2007-08? How do you reconcile this answer with your answers for items (a) and (c)?
(e) Use your answers to explain why the unemployment rate will never fall to zero and a certain amount of unemployment is desirable.
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