Full-employment output

Definition

Full-employment output refers to the level of real GDP where all available resources in an economy are being used efficiently, resulting in zero cyclical unemployment.

Related terms

Output gap: The difference between actual real GDP and potential real GDP. A positive output gap indicates an economy is producing above its full-employment level.

Cyclical unemployment: Unemployment caused by fluctuations in economic activity, such as during recessions or downturns.

Labor force participation rate: The percentage of working-age population that is either employed or actively seeking employment.