Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
All resources are fully utilized
B
Unemployment rate is zero
C
The economy is producing at its potential output
D
Inflation is at its highest
Understanding the Answer
Let's break down why this is correct
Answer
Full employment equilibrium in economics refers to a situation where all individuals who are willing and able to work can find a job at prevailing wage rates. This does not mean that everyone is employed, but rather that unemployment is at a natural level, which includes people who are temporarily between jobs. In this state, the economy is operating at its maximum potential without causing inflation, meaning that resources are being used efficiently. For example, if a country has a labor force of 100 million people and 95 million are employed while 5 million are transitioning between jobs, it may be considered to be in full employment equilibrium. This balance helps maintain economic stability and growth, ensuring that the workforce is fully utilized.
Detailed Explanation
Full employment equilibrium means the economy is working at its best. Other options are incorrect because Some might think full employment means using every resource; People often believe full employment means no one is unemployed.
Key Concepts
full employment
Topic
Full Employment Equilibrium
Difficulty
easy level question
Cognitive Level
understand
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