When an economy is working at its potential GDP, machines and factories are running at capacity, and therefore the unemployment rate is relatively low at the natural rate of unemployment. For this reason, potential GDP is usually also called full-employment GDP.
What does one mean by natural rate of unemployment?
Natural unemployment is the minimum unemployment rate resulting from real or voluntary economic forces. It represents the amount of people unemployed due to the structure of the labor force, including those replaced by technology or those that lack the skills necessary to get hired.
What is full employment GDP ?
The nation's total output of final goods and services. financial condition GDP. financial condition means that nearly all of our resources are being used. the extent of spending necessary to provide full employment of our resources.
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