In the short run,one reason why we do not define "full employment" as 0 percent unemployment is because
A)Of the direct relationship between unemployment and inflation.
B)The closer the economy gets to capacity output,the greater the risk of inflation.
C)Of the vertical aggregate supply curve.
D)0 percent unemployment is consistent with price stability.

Question

Quizplus · Accepted Answer

The closer the economy gets to capacity output, the greater the risk of inflation. Therefore, defining "full employment" as 0 percent unemployment would mean operating at or beyond capacity output, which would lead to inflationary pressures.

In the Short Run,one Reason Why We Do Not Define