Full employment occurs when

Question

Quizplus · Accepted Answer

Full employment occurs when there is no cyclical unemployment. This means that all workers who are willing and able to work at the going wage rate are employed, though there may still be some level of frictional or structural unemployment due to factors such as job search and skills mismatches. Due to these factors, it is generally accepted that full employment occurs when the unemployment rate is around 4-5%. Therefore, option A is not entirely accurate as full employment is not necessarily defined by an unemployment rate less than 5%. Option D is also not accurate as there is always likely to be some degree of unemployment, even in a fully employed economy.

Full Employment Occurs When