Full Employment
Definition
Full employment is an economic condition where all available labor resources are being used efficiently without any cyclical unemployment present. It occurs when the actual unemployment rate equals the natural rate of unemployment.
Analogy
Think of full employment like a school cafeteria during lunchtime. All tables are occupied with students eating their meals; nobody is left sitting idle due to lack of space or availability. Similarly, full employment means everyone who wants a job has one.
Related terms
Unemployment Rate: The percentage of individuals who are actively seeking employment but cannot find jobs.
Natural Rate of Unemployment: The natural rate of unemployment is the level of unemployment that exists when the economy is at full employment. It includes frictional and structural unemployment but excludes cyclical unemployment.
Labor Force Participation Rate: The labor force participation rate measures the percentage of working-age individuals who are either employed or actively seeking employment.
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