Principles of Macroeconomics / Unit 10 MAC 0903 short lesson, about 20 seconds
Full Employment Is Not Zero Unemployment
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The idea
Full employment means zero cyclical unemployment, not zero unemployment. Frictional and structural unemployment remain even at potential output, and together they are the natural rate.
In practice
An economy at potential still has people between jobs and people whose skills no longer match.
Where people slip
A policy promising zero unemployment is promising something the term does not mean.
Your place on the trail
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