According to Classical Theory, Full Employment in the Labor Market

question 223

Multiple Choice

According to classical theory, full employment in the labor market occurs

• A) whenever aggregate demand is less than aggregate supply.
• B) at a wage rate at which quantity demanded equals quantity supplied.
• C) only when the economy has just experienced a demand shock.
• D) only when actual expenditures are greater than desired expenditures.

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Definitions:

Unemployed

The status of being without a paid job but being available for and seeking work.

Unemployment Rate

This term measures the proportion of people without jobs who are actively seeking work in relation to the total workforce.

Bureau of Labor Statistics

A U.S. government agency responsible for collecting and analyzing labor economics and statistical data.

Discouraged Workers

Individuals not actively searching for employment due to believing no jobs are available for them.