Full employment does not mean that there is zero unemployment because
A)some cyclical unemployment is always present.
B)some frictional and structural unemployment is always present.
C)business fluctuations are inevitable.
D)of the existence of discouraged workers.
E)of unrealistic wage expectations.

Question

Quizplus · Accepted Answer

Frictional and structural unemployment are inherent in any economy, regardless of its level of economic activity or output. Therefore, even in a fully employed economy, some individuals will be unemployed due to such factors. While cyclical unemployment is tied to economic fluctuations, it is not the only cause of unemployment, hence option A is incorrect. Option C is not correct because full employment can exist even during periods of economic stability. Option D is possible, but discouraged workers are not the only factor leading to unemployment in a fully employed economy. Option E is also incorrect because unrealistic wage expectations may be a factor in unemployment, but it does not cause full employment to mean zero employment.

Full Employment Does Not Mean That There Is Zero Unemployment