What is meant by full employment? Why isn't the full employment rate zero? What causes frictional unemployment?
What will be an ideal response?
Full employment is the level of unemployment that corresponds to normal friction in the labor market. Since a dynamic economy will always experience changes in demand for goods and services, there will always be some frictional unemployment. Frictional unemployment refers to the unemployment resulting from the time people spend between jobs, looking for other work.
You might also like to view...
Because the United States is highly integrated with the international capital market, international capital flows tend to
a. counteract the negative effect on aggregate demand of lower interest rates. b. counteract the positive effect on aggregate demand of higher interest rates. c. strengthen the negative effects on aggregate demand of higher interest rates. d. strengthen the negative effects on aggregate demand of lower interest rates.
Macroeconomics, as opposed to microeconomics, includes the study of what determines the level of
A) employment in a specific industry. B) employment in the economy. C) output of a specific firm. D) output of a specific industry.