Question

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Which are true statements about the full-employment rate of unemployment?
A. It is not zero.
B. It is a negative number.
C. It includes frictional and structural unemployment.
D. It occurs when the economy is producing at potential output.

Answer 1

The full-employment rate of unemployment is not zero, includes frictional and structural unemployment, and occurs when the economy is producing at potential output.

Step-by-step explanation:

The true statements about the full-employment rate of unemployment are:

1. It is not zero. The unemployment rate never falls to 0%, even when the economy is producing at or slightly above potential output.
2. It includes frictional and structural unemployment. The full-employment rate of unemployment encompasses both frictional unemployment, which occurs when people are looking for a better job match, and structural unemployment, which happens when demand shifts away from certain job skills.
3. It occurs when the economy is producing at potential output. Full employment is achieved when the economy is operating at its potential GDP, meaning there is no cyclical unemployment.