Question 3.
(a) Consider the search and matching model. If the economy has a powerful labor union that gives
workers more bargaining power. i.e. a increases. Analysis of the effects on labor participation
rate, unemployment rate, vacancy rate, and GDP. Use graphic(s) to help you to explain.
(10 marks)
(b) Consider the search and matching model again. To prevent the spread of coronavirus, workers
were ordered to stay home. Let us interpret z decreases because workers can not go to work.
Determine the effects on the unemployment rate, vacancy rate, labor force, the number of
firms, aggregate output, and labor market tightness in this pandemic. Use graphic(s) to help
you to explain. (10 marks)
Dont write definitions.
Give me specific process of calculation