Full employment occurs when
A) there is no unemployment.
B) there is no frictional unemployment.
C) there is no cyclical unemployment.
D) the unemployment rate is less than 5 percent.

Question

Quizplus · Accepted Answer

Full employment occurs when there is no cyclical unemployment, which is the unemployment due to a lack of demand for goods and services in the economy. There may still be some level of frictional and structural unemployment, as these are natural components of a dynamic economy where workers change jobs and industries evolve. Therefore, choices A and B are incorrect. A specific unemployment rate such as less than 5 percent is not necessarily indicative of full employment since it depends on various factors such as the labor force participation rate and job market conditions. Therefore, choice D is also incorrect.

Full Employment Occurs When