Author Question: Why is there unemployment even when the economy is at full employment? What will be an ideal ... (Read 98 times)

moongchi

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Why is there unemployment even when the economy is at full employment?
 
  What will be an ideal response?

Question 2

On a time-series graph, time is typically shown
 
  A) as an area.
  B) along the x-axis.
  C) along the y-axis.
  D) as an implicit variable held constant.



T4T

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Answer to Question 1

There is unemployment even at full employment because there always will be unemployment. Unemployment is a natural occurrence in any economy with changes, such as high school or college graduates entering the labor force, or technological advances in one sector, or consumer preferences changing to favor one product over another. Frictional and structural unemployment will always exist. Cyclical unemployment, however, is a different matter. Cyclical unemployment does not seem to have the same degree of inevitability and hence full employment is defined as occurring when cyclical unemployment equals zero.

Answer to Question 2

B



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