The current thinking of economists is that the full-employment rate of unemployment in the United States occurs when about
A) 100 percent of the labor force is employed.
B) 5 percent of the labor force is unemployed.
C) 90 percent of the total population is employed.
D) 7.5 percent of the labor force is unemployed.
E) 67 percent of production costs are the result of employed labor.

Question

Quizplus · Accepted Answer

The current thinking of economists is that the full-employment rate of unemployment in the United States occurs when about 5 percent of the labor force is unemployed. This is known as the natural rate of unemployment and accounts for frictional and structural unemployment that is always present in an economy. A 0 percent unemployment rate is not feasible or desirable as it can create inflationary pressures in the economy.

The Current Thinking of Economists Is That the Full-Employment Rate