Question

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

Answer 1

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

Step-by-step explanation:

The full-employment rate of unemployment encompasses several key ideas integral to understanding labor market dynamics. Firstly, it is important to note that the full-employment rate of unemployment is not zero, due to the inherent nature of frictional and structural unemployment found within any economy. Secondly, it is associated with a scenario where the economy is operating at its potential output, meaning it corresponds with an economy's efficient level of production. Lastly, the concept does not consider negative numbers, as unemployment rates cannot be negative.

Based on these points, the true statements about the full-employment rate of unemployment are:

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