When an economy is operating at "full employment," as economists usually define the term,
A)Everyone who wants a job has a job.
B)Inflation is a significant problem.
C)The unemployment rate is 4-6 percent.
D)The unemployment rate is 0 percent.

Question

Quizplus · Accepted Answer

Full employment, as economists usually define it, refers to an economy where the unemployment rate is at a level consistent with normal job turnover. This rate is typically considered to be between 4-6 percent, as it allows for frictional unemployment (people who are temporarily between jobs or transitioning to new ones) and some level of structural unemployment (due to mismatches between worker skills and job requirements). Therefore, option C is the best choice. Option A is incorrect as full employment does not mean every single person who wants a job has one, as there will always be some level of unemployment in the economy. Option B is incorrect as inflation can still be present at full employment, but it is not necessarily a significant problem. Option D is incorrect as a 0 percent unemployment rate is not possible or sustainable in any economy.

When an Economy Is Operating at "Full Employment," as Economists