Define Full Employment and Its Relationship to the Natural Rate

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The Answer is Full employment can be defined as the level of unemployment at which the actual inflation rate is equal to people's inflationary expectations. Full employment is generally perceived to be equivalent to the natural rate of unemployment. The natural rate of unemployment can also be described as the unemployment level where there is only frictional and structural unemployment; that is, cyclical unemployment is zero. Economists often refer to the natural rate of unemployment as the nonaccelerating inflation rate of unemployment, defined as the lowest unemployment rate most consistent with a low rate of inflation.

Define Full Employment and Its Relationship to the Natural Rate

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