If the economy is at full employment,
A) the only unemployment is frictional unemployment plus discouraged workers.
B) the entire population is employed.
C) the entire labor force is employed.
D) real GDP equals potential GDP.

Question

Quizplus · Accepted Answer

Full employment is defined as employment when there is no cyclical unemployment, which means that real GDP equals potential GDP. It does not mean that everyone in the entire population or labor force is employed, and there may still be frictional and structural unemployment present.

If the Economy Is at Full Employment