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

Full employment is often defined as the level of employment where everyone who is looking for a job has one. However, economists recognize that a 0 percent unemployment rate is unrealistic and could lead to inflationary pressures as the economy reaches capacity output. The closer an economy gets to full employment, the more likely it is that firms will have to compete for qualified workers, driving up wages and eventually prices. Therefore, full employment is often defined as the level of employment where the unemployment rate is low but still allows for some level of natural unemployment to exist.

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