Cyclical unemployment .
A) grows at the same rate as potential GDP
B) is zero at a business- cycle trough
C) decreases during a recession
D) decreases during an expansion

Question

Quizplus · Accepted Answer

Cyclical unemployment is the unemployment rate that fluctuates with the business cycle, increasing during a recession and decreasing during an expansion. Therefore, option D is the best choice. Option A is incorrect as cyclical unemployment does not necessarily grow at the same rate as potential GDP, and option B is incorrect as there is always some level of cyclical unemployment even at business cycle troughs. Option C is also incorrect as cyclical unemployment actually increases during a recession.

Cyclical Unemployment