ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -1. An unemployment rate of 5% is often considered full employment. This level of unemployment is enough to minimize inflation and allow workers to move between jobs, but those wanting full-time work should be able to find a full-time job (even if it is not their preferred occupation).

Detailed explanation-2: -Natural is the lowest unemployment rate because ‘full employment’ is not possible in the economy.

Detailed explanation-3: -BLS defines full employment as an economy in which the unemployment rate equals the nonaccelerating inflation rate of unemployment (NAIRU), no cyclical unemployment exists, and GDP is at its potential.

Detailed explanation-4: -When the economy is operating below full employment, some labor, capital, or other resources are unemployed (beyond the natural rate of unemployment). Numerous factors might cause an economy to temporarily be below full employment equilibrium.

Detailed explanation-5: -Simply put, maximum employment – sometimes called full employment – is the highest level of employment the economy can sustain without generating unwelcome inflation. It describes an economy in which nearly everyone who wants to work has a job.