In conditions of full employment
A) no one in or out of the labor force is unemployed.
B) the only unemployment results from a normal frictions and structural mismatches in the labor market.
C) the only unemployment results from cyclical swings in economic activity.
D) no one in the labor force is unemployed.

Question

Quizplus · Accepted Answer

In conditions of full employment, the economy is at its natural rate of unemployment, which means the only unemployment that exists is due to frictional and structural factors in the labor market, such as people transitioning between jobs or changing industries. Cyclical swings in economic activity do not affect unemployment in full employment conditions. Choice A and D are incorrect because even in full employment conditions, some people may choose not to participate in the labor force.

In Conditions of Full Employment