What is the likely consequence of an unemployment rate falling below the rate at which "full employment" is achieved?
A)The threat of recession.
B)Increased inflationary pressures.
C)An increase in discouraged workers.
D)None of the choices are correct.

Question

Quizplus · Accepted Answer

When the unemployment rate falls below the rate at which "full employment" is achieved, labor markets become tighter and employers struggle to find enough workers to meet demand. This can lead to an increase in wages, which in turn can contribute to inflationary pressures. Therefore, increased inflationary pressures is the likely consequence in this scenario.

What Is the Likely Consequence of an Unemployment Rate Falling