3.2 full employment

Question 1

full employment

Answer 1

full employment refers to a situation that indicates a non-zero, low rate of unemployment when all those who are able and willing to work have gained employment

Question 2

natural rate of unemployment

Answer 2

the natural rate of unemployment is the level of unemployment which consists of structural and frictional unemployment, and demand-deficient unemployment is zero

Question 3

unemployment

Answer 3

unemployment refers to the situation where people of legal working age are not working, but are available for work and actively seeking work

Question 4

working age population

Answer 4

the working age population consists of the labour force and people who are outside of the labour force

Question 5

labour force

Answer 5

the labour force refers to all those within a country who are economically active, ie they are either working or actively seeking employment

Question 6

unemployment rate

Answer 6

the unemployment rate is the percentage of the labour force that is unemployed

Question 7

demand-deficient unemployment

Answer 7

demand-deficient unemployment occurs due to the lack of aggregate demand

Question 8

structural unemployment

Answer 8

structural unemployment arises due to a mismatch of skills between the unemployed workers and those required by the jobs

Question 9

frictional unemployment

Answer 9

frictional unemployment refers to the unemployment that occurs because of imperfect information that leads to time taken for workers to find jobs that best suit their preferences and skills

Question 10

real-wage unemployment

Answer 10

real-wage unemployment refers to unemployment caused when wages are set above the free market equilibrium wage