Question

The full-employment output level is a. the level of output at which the economy ceases to...

The full-employment output level is

a. the level of output at which the economy ceases to grow

b. the level of output at which economic growth is maximized

c. the level of output at which the rate of inflation is zero

d. the level of output at which the unemployment rate is at its natural level

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Homework Answers

Answer #1

An economy's full employment output is the production level (RGDP) when all available resources are used efficiently. It equals the highest level of production an economy can sustain for the long-run. It is also referred to as the full employment production, natural level of output or long-run aggregate supply.

When an economy is producing exactly its full employment output, the rate of unemployment is equal to the natural rate of unemployment.

The correct option is

d. the level of output at which the unemployment rate is at its natural level.

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