Which of the following is eliminated when output equals full-employment GDP?
A)Cyclical unemployment.
B)Demand-pull inflation.
C)The need for autonomous consumption.
D)Net exports.

Question

Quizplus · Accepted Answer

When output equals full-employment GDP, there is no cyclical unemployment because all available labor resources are being utilized. However, demand-pull inflation may still exist if the demand for goods and services exceeds the available supply, causing prices to rise. The need for autonomous consumption is not eliminated by full-employment GDP because individuals still have their own motives for spending money. Net exports may still occur if the economy trades with other nations.

Which of the Following Is Eliminated When Output Equals Full-Employment