Instructions You can submit your answers either electronically on Camino or on paper. For each question, please make sure to support your answers graphically Question 1 (50 points) Consider a one-sided search model of unemployment we developed in class. We discussed the effect of an increase in unemployment insurance benefits, b as well as the impact of an increase in the job offer rate, p, on equilibrium outcomes. Now, analyse the effects of an increase in the separation rate, s, on the reservation wage, w, and on the long-run unemployment rate, U. Question 2 (50 points) Again, consider a one-sided search model of unemployment. In the model we discussed in class when an unemployed who receives a job offer turns it down, he/she stays unemployed for a period, receives an unemployment benefit b and keeps searching for a job. Now, let's assume that government doesn't qualify people who turned down a job offer for an unemployment benefit and those workers receive no benefit for one period. How such a policy would impact the reservation wage, w, and the long-run unemployment rate, U.
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