Definition
- Full employment
- Full employment is when the actual unemployment rate equals the natural rate, so some people are still out of work.
- Not to be confused with: Natural rate of unemployment
- The natural rate of unemployment is the rate of unemployment that would remain if the economy were neither booming nor in recession.
Test yourself
What is the difference between full employment and natural rate of unemployment?
Full employment is the state of the economy; the natural rate is the unemployment that remains in that state.