In economic terms, what does 'full-employment' refer to?

'Full-employment' in economic terms refers to a situation where all available resources are employed efficiently. This does not imply that there is zero unemployment. Instead, it recognizes that some level of unemployment is natural, such as frictional unemployment, which occurs when workers transition between jobs. Full employment indicates that while there are some who may be temporarily out of work or transitioning, the economy is utilizing its resources, including labor, to maximize productivity and output.

This concept encompasses more than just employment levels; it evaluates how effectively resources are allocated and used in the economy. When resources are employed efficiently, the economy can achieve its potential output, which is vital for growth and sustainability. The other options do not accurately reflect the full-employment concept in economics and focus on specific scenarios that do not encompass the broader understanding of resource utilization.