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Does the​ Fed's dual mandate require it to attain a zero percent unemployment​ rate? Briefly explain....

Does the​ Fed's dual mandate require it to attain a zero percent unemployment​ rate? Briefly explain. A. ​No, because even when the economy is at full​ employment, there is still a natural rate of unemployment. B. ​No, because even when the economy is at full​ employment, some people will always be cyclically unemployed. C. ​Yes, because without a zero percent unemployment​ rate, there will be financial distress in the economy. D. ​Yes, because without a zero percent unemployment​ rate, GDP will be below its potential level.

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Answer #1

Solution: No, because even when the economy is at full employment, there is still a natural rate of unemployment

Explanation: Fed's dual mandate does not target to attain a zero percent unemployment​ rate because even in a healthy economy, there would be a some level of unemployment for three causes:

-- Frictional unemployment: Few workers would always be in between jobs

-- Structural unemployment: As the economy evolves, there would be an unavoidable mismatch between the employers' requirement and workers' job skills

-- Surplus Unemployment: It arises when there is an intervention by government with price/ wage control

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