5.0 Introduction

For an economy to produce all it can and achieve a solution on its production possibilities curve, the factors of production in the economy must be fully employed. Failure to fully employ these factors leads to a solution inside the production possibilities curve in which society is not achieving the output it can produce.

In thinking about the employment of society’s factors of production, we place special emphasis on labour. The loss of a job can wipe out a household’s entire income; it is a more compelling human problem than, say, unemployed capital, such as a vacant apartment. In measuring unemployment, we thus focus on labour rather than on capital and natural resources. As of October 2023, Canada’s official unemployment rate is 5.7%, measured by Statistics Canada.