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Most economists will say that the
U.S. economy achieves full employment at an UE rate of about
5%. Five percent unemployment in the U.S. is about eight
million people unemployed and THAT is called full
employment. How can 8 million unemployed people be called
"full employment"? How is the unemployment rate calculated?
Who is employed? Who is unemployed? What is "full"
employment? What is "unemployment"?
We will try to understand the answers
to these questions by returning to the 5Es of economics from
lesson 1b. We learned there that the 5 Es were five ways to
reduce scarcity and achieve the maximum level of
satisfaction for a society. In the U.S. we can produce the
maximum amount of output when there is about 5%
unemployment. Confusing? Yes. It should be - - - now, but
after studing this lesson it will be much more
clear.
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