The difference between the number of workers employed if the economy was operating at full employment and the number of workers currently employed given aggregate expenditures is known as
A) cyclical unemployment
B) frictional unemployment
C) structural unemployment
D) unemployment is not possible in the short run macro model
E) urban unemployment

Question

Quizplus · Accepted Answer

The difference between the number of workers employed in full employment (also known as potential output) and the number of workers currently employed is the definition of the unemployment gap, which is associated with cyclical unemployment. Cyclical unemployment is caused by fluctuations in the economy, specifically the business cycle, and occurs when the aggregate level of demand in the economy is insufficient to create job opportunities for all those willing and able to work.

The Difference Between the Number of Workers Employed If the Economy