Full employment

An economic condition in which everyone willing and able to work can find a job, apart from frictional and structural unemployment. It does not require zero measured unemployment.

Natural rate of unemployment: The unemployment rate associated with an economy’s labor-market structure when cyclical unemployment is absent. It captures the frictional and structural unemployment compatible with full employment.
John Maynard Keynes: A British economist whose work shaped modern macroeconomics and analysis of employment and aggregate demand. His account of involuntary unemployment helped establish the case for public action.
Fiscal policy: Government decisions about taxation and spending used to influence economic activity. Public spending and tax changes can raise demand when unemployment is cyclical.
Zero unemployment: A condition in which no people in the labor force are unemployed. Full employment allows some frictional and structural unemployment rather than requiring a zero rate.
Output gap: The difference between actual economic output and the output an economy could produce sustainably. A negative output gap often signals demand-driven unemployment below full employment.
The General Theory of Employment, Interest and Money: John Maynard Keynes’s 1936 book explaining employment and output through aggregate demand and monetary factors. It argued that an economy could remain below full employment without corrective policy.
Monetary policy: Central-bank actions that influence money, credit, interest rates, and economic conditions. Interest-rate decisions affect hiring by changing borrowing costs and aggregate demand.
Underemployment: A condition in which workers have less work, lower hours, or poorer use of their skills than they seek. A low unemployment rate can coexist with substantial unmet demand for work.
Phillips curve: A model describing a relationship between inflation and unemployment, especially over the short run. It frames the perceived trade-off policymakers face when pursuing low unemployment.
Employment Act of 1946: A United States law declaring federal responsibility to promote maximum employment, production, and purchasing power. It translated postwar full-employment aspirations into a national policy commitment.

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