The table below shows real GDP, potential GDP and the unemployment rate for a hypothetical economy. TABLE 31- 1
-Refer to Table 31- 1. In which years is this economy operating at full employment?

Question

The table below shows real GDP, potential GDP and the unemployment rate for a hypothetical economy.  TABLE 31- 1
-Refer to Table 31- 1. In which years is this economy operating at full employment?

Quizplus · Accepted Answer

Full employment occurs when the unemployment rate equals the natural rate of unemployment, which is assumed to be 5% in this hypothetical economy. Therefore, we can see that in 2004 and 2008, the unemployment rate is exactly 5%, indicating that the economy is operating at full employment in those years.

The Table Below Shows Real GDP, Potential GDP and the Unemployment