[startupcfo]

” Full employment does not mean zero unemployment.”

What exactly does that mean? My understanding is that unemployment is the % of people who are actively looking for jobs that cant find work.

So full employment = zero unemployment right?

BEC - 87 | 02/28
REG - 70 | 06/10, REMATCH | 08/30
AUD - XX | 09/10
FAR - XX | 12/10

[tuanxn]

My understanding is that you will never have 0 unemployment because there will always be people moving between jobs (frictional unemployment) and to a lesser extent structural unemployment (location and skillset of labor pool and employment opportunities are mismatched).

[monikernc]

the full employment unemployment rate is the sum of frictional and structural unemployment. full employment is the level of employment where the actual unemployment rate equals the natural employment rate. the natural rate of unemployment occurs when the number of job seekers equals the number of jobs vacancies and actual unemployment will be greater than 0 due to frictional unemployment (normal labor turnover)

bottom line there will always be churn in the labor market, like he said above.

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[Biff-1955-Tannen]

“Officially, full employment is when there is no cyclical unemployment. Even with frictional and structural unemployment, officially full employment can exist. Said another way, if unemployment is due solely to frictional, structural and seasonal causes (i.e., the natural rate of unemployment), the economy is in a state of full employment”

There can be unemployment due to frictional, structural, and seasonal reasons. There just can not be unemployment due to cyclical reasons. So if there is no unemployment for cyclical reasons, there is full employment

“Cyclical Unemployment: Members of the labor force who are not employed because a downturn in the business cycle (i.e., an economic contraction) has reduced the current need for workers.”

AUD 93 Jan 16
BEC 83 Feb 16
FAR 83 Apr 16
REG 84 May 16

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[startupcfo]

“Officially, full employment is when there is no cyclical unemployment. Even with frictional and structural unemployment, officially full employment can exist. “

thanks biff, where'd you get that?

BEC - 87 | 02/28
REG - 70 | 06/10, REMATCH | 08/30
AUD - XX | 09/10
FAR - XX | 12/10

[Biff-1955-Tannen]

If you have CPAExcel it's the study text in Economic concepts > Macroeconomics > Gross Measures – Employment/Unemployment

AUD 93 Jan 16
BEC 83 Feb 16
FAR 83 Apr 16
REG 84 May 16

99% Ninja MCQ only

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