Why is it so difficult to define full employment What unempl

Why is it so difficult to define full employment? What unemployment rate should the government be shooting for today?

Solution

Why is it so difficult to define full employment? What unemployment rate should the government be shooting for today?

Full employment embodies the highest level of skilled and unskilled labor that could be employed within an economy at any given point of time. But there could be a small percentage of frictional employment resulting from workers who are in between jobs, but still in the labor force. Full employment may lead to inflationary period, workers having more disposable income which would drive prices upward.

Generally, unemployment of 3% or less would be considered to be full employment. The government is trying to shoot at an unemployment rate between 5 and 6 percent, and the Obama government claims an unemployment rate of 5.4 percent.

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