Full employment in the U.S.economy means that
A)Frictional unemployment has been reduced to zero.
B)The total unemployment rate has been reduced to zero.
C)The economy has reached the lowest level of unemployment compatible with price stability.
D)Structural unemployment has reached its minimum as a result of increased spending,and the economy is moving toward the peak of the business cycle.

Question

Quizplus · Accepted Answer

Full employment in the U.S. economy means that the economy has reached the lowest level of unemployment compatible with price stability. This means that there is still some level of unemployment (including frictional and structural unemployment) but it is at the natural rate of unemployment where the economy is operating at its potential output and inflation is stable. It is not possible to reduce unemployment to zero without causing inflationary pressures on the economy, which is why full employment is defined as the lowest level of unemployment that can be achieved without causing inflation.

Full Employment in the U.S.economy Means That