When the labour market is at full employment

Question

Quizplus · Accepted Answer

Full employment means that there is no cyclical unemployment in the economy, but it does not necessarily mean that there is no structural or frictional unemployment. Therefore, options A and B are incorrect. The unemployment rate may not be exactly 0%, but it would be close to the natural rate of unemployment, which includes frictional and structural unemployment. Therefore, option C is also incorrect. Overall, D is the best choice because it accurately describes the absence of cyclical unemployment in a full employment scenario.

When the Labour Market Is at Full Employment