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Finance: What is Above Full Employment Equilibrium? 20 Views
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What is Above Full Employment Equilibrium? Above Full Employment Equilibrium happens when an economy is basically doing more than it realistically can. It’s producing at a rate that’s higher than expected in the long-term or higher than previous averages. It also means that all labor available in the economy is being used, so everyone that can work...is working. This doesn’t last long though; the high demand that causes it drives up prices that eventually come back to equilibrium when they are no longer affordable.
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Transcript
- 00:00
Finance a la shmoop what is above full employment equilibrium? question wouldn't
- 00:08
full employment mean that everyone who wants a job is employed wouldn't that be
- 00:14
full employment well no it's a government statistics so full isn't [Government worker in office]
- 00:18
really full it's you know full-ish and full is probably impossible anyway
- 00:24
because there will always be college students part-time uber drivers [Students graduating and uber driver appears]
Full Transcript
- 00:27
derelicts and you know actors so when economists talk about full employment
- 00:31
they mean that everyone who is actively seeking work is generally finding work
- 00:37
but it recognizes that a lot of people have either given up the hunt and are
- 00:41
happy living on the equivalent of replacement value of you know 48 grand a [Woman at the desk of a cafe]
- 00:45
year of welfare or they're you know off the grid
- 00:48
well the equilibrium notion is the hard part to conceive here when "almost
- 00:53
every single living being" is employed it likely means that the
- 00:58
economy is on fire in the in the good way tons of demand for stuff tons of
- 01:04
shortages of labor and supplies and it also probably means that we have roaring
- 01:08
inflation which is generally bad there is a balance of employed and unemployed [employed and unemployed workers on a scale]
- 01:13
which makes for a stable set of parameters that keep the people employed
- 01:17
who want to be employed and it keeps inflation at small numbers such that old
- 01:22
people who generally retire on bonds aren't forced to live inhuman lives in
- 01:27
their station wagons parked on the side of the road because roaring inflation at
- 01:32
6% has made their 2 percent a year bond investment returns destroy most of the
- 01:36
buying power of their life savings belt historically economists have generally
- 01:41
targeted 95 percent as the full employment equilibrium number or 5
- 01:45
percent as the unemployment rate they're shooting for in other words at that
- 01:49
level there is low or just very modest inflation and the employment seeking [Man discussing employment equilibrium]
- 01:55
masses have generally found what they've been looking for you know like bono
- 01:59
turns out he was just looking for his car keys.... go figure..[Bono singing into microphone]
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