Cyclical unemployment occurs when
A) individuals enter into the labor market making the rounds of potential employers.
B) individuals give up the search for employment.
C) a business cycle recession decreases employment.
D) individuals with skills no longer valued in the labor market cannot find employment.

Question

Quizplus · Accepted Answer

Cyclical unemployment occurs when there is a downturn in the economy, leading to decreased demand for goods and services, which in turn leads to a decrease in demand for workers. This causes businesses to lay off workers, and thus results in a rise in unemployment. This type of unemployment is referred to as cyclical because it is tied to the business cycle - during an economic boom, unemployment tends to be low, whereas during a recession, unemployment tends to be high.

Cyclical Unemployment Occurs When