Economics Unemployment Questions
Cyclical unemployment is caused by fluctuations in the business cycle, which refers to the periodic expansions and contractions of economic activity. During economic downturns or recessions, businesses may experience a decrease in demand for their goods and services, leading to a decrease in production and a subsequent decrease in the demand for labor. This results in cyclical unemployment as workers are laid off or unable to find employment due to the reduced demand for labor. Additionally, cyclical unemployment can also be caused by changes in technology or shifts in consumer preferences, which can lead to structural unemployment.