Cyclical unemployment

Question

Quizplus · Accepted Answer

Cyclical unemployment refers to unemployment that is a result of economic downturns or recessions. Therefore, it naturally decreases during economic expansions when the economy is growing and adding jobs. B is incorrect because cyclical unemployment is not part of the natural unemployment rate, which consists of frictional and structural unemployment. C is incorrect because increased international competition may lead to structural unemployment, but not necessarily cyclical. D is incorrect because increasing unemployment compensation payments may actually prolong cyclical unemployment by reducing the incentive for workers to actively seek employment.

Cyclical Unemployment