When the economy is at full employment, A. the unemployment rate is greater than zero. B. all remaining unemployment is either frictional or structural. C. the natural rate of unemployment prevails. D. All of the above.

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Business

Asa Olson

15 October, 14:56

When the economy is at full employment, A. the unemployment rate is greater than zero. B. all remaining unemployment is either frictional or structural. C. the natural rate of unemployment prevails. D. All of the above.

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Finnegan Arellano · Answer 1

D. All of the above.

Explanation:

Full employment describes an economic situation where every able and willing worker is employed. It represents a situation where the highest possibles numbers of unskilled and skilled people are in employment. In practice, full employment is when the economy attains the optimal levels of unemployment.

At full employment, the unemployment rate will be above zero percent. The reason is that the economy will always have as frictional unemployment. Frictional unemployment is the time it takes for an individual to find their ideal job. Structural and frictional unemployment contribute about 2 to 3 percent of unemployment in the economy. Economists thus consider a 3 percent unemployment as full employment.