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Max is currently not employed and values an hour of leisure at $9/hour. If he obtains a job, he will earn $10/hour. (a) Since the current unemployment rate is 8%, Max assumes the probability

Max is currently not employed and values an hour of leisure at $9/hour. If he obtains a job, he will earn $10/hour. (a) Since the current unemployment rate is 8%, Max assumes the probability of receiving a job offer if he decides to seek employment is 92%. Is Max likely to be a discouraged worker? Why or why not? (b) If the unemployment rate rises to 10% and the wage Max will earn if he finds employment falls to $9.50/hour during a recession, is Max now likely to be a discouraged worker? Why or why not?

Jul 05 2021 View more View Less

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