In recent years, economists have come to believe that full employment in the U.S. economy occurs at an unemployment rate between:
A)1.0 and 2.0 percent.
B)2.5 and 3.5 percent.
C)4.5 and 5.5 percent.
D)6.5 and 7.5 percent.

Question

In recent years, economists have come to believe that full employment in the U.S. economy occurs at an unemployment rate between:
A)​1.0 and 2.0 percent.
B)​2.5 and 3.5 percent.
C)​4.5 and 5.5 percent.
D)​6.5 and 7.5 percent.

Quizplus · Accepted Answer

The natural rate of unemployment, which is the rate of unemployment that reflects structural and frictional factors in the economy, is estimated to be around 4.5 to 5.5 percent by most economists today. This means that when the unemployment rate is around this level, the economy is considered to be at full employment, with any further decrease in unemployment likely to lead to inflationary pressures. This view is based on empirical data and research, and is widely accepted in the field of economics.

In Recent Years, Economists Have Come to Believe That Full