Which of the following statements is true ?
A) The four phases of the business cycle, in order, are: peak, recovery, trough, recession.
B) When unemployment is rising then real GDP is rising.
C) The economic problem typically associated with a recovery is rising unemployment.
D) Full employment exists in an economy when the unemployment rate equals the sum of frictional, and structural unemployment rates.

Question

Quizplus · Accepted Answer

Full employment in an economy does not mean a 0% unemployment rate but rather the point at which all available labor resources are being used in the most economically efficient way. This includes frictional unemployment, which is the short-term unemployment of people who are changing jobs, and structural unemployment, which is a longer-term failure of demand to match the supply of workers, due to skills mismatches or other factors. The sum of these types of unemployment rates is considered the natural rate of unemployment, and achieving this level is what economists refer to as full employment.

Which of the Following Statements Is True