Cyclical unemployment exists when
A) real GDP exceeds potential GDP.
B) frictional and structural unemployment is zero.
C) real national income exceeds potential income.
D) real GDP is less than potential GDP.

Question

Quizplus · Accepted Answer

Cyclical unemployment occurs when real GDP is less than potential GDP. This is because in a recession or economic downturn, businesses may have to lay off workers or reduce their hours, leading to higher unemployment rates.

Cyclical Unemployment Exists When