What is the full-employment output level?
A) The output level that results when the loanable funds market clears
B) The output level that results when the returns to labor are zero
C) The output level that results when factories are completely full
D) The output level that results when the labor market clears
E) The output level that would occur if the output level was positive.

Question

Quizplus · Accepted Answer

Full-employment output level is the output level where the labor market is in equilibrium and there is no cyclical unemployment. Therefore, the best choice is D - the output level that results when the labor market clears.

What Is the Full-Employment Output Level