Questiоn 4 Suppоse thаt 20 yeаrs аgо, a country had a trend job-separation rate of 1% and a trend job-finding rate of 9%. Now, the country’s trend job-separation rate is 5% and the trend job-finding rate of 15%. What is the current natural rate of unemployment? Did it increase or decrease relative to 20 years ago? Additionally, provide intuition for why the natural rate changed this way. Compared to 20 years ago, this country has reduced the amount of time unemployed workers receive unemployment benefits while looking for a new job. Some politicians have argued that this change could be largely responsible for the change in the unemployment rate over this period of time. Using what you know about the job-finding and job-separation rates in this country, agree or disagree with these politicians (as always, explain your reasoning). If the current unemployment rate is above the natural rate of unemployment in this country, is current output above, below, or equal to potential output according to Okun’s law?
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