Cyclical unemployment is caused by:
A) shifts in the structure of the economy.
B) seasonal layoffs.
C) declines in actual output below its full-employment level.
D) the absence of job skills among the unemployed.

Question

Quizplus · Accepted Answer

Cyclical unemployment is caused by declines in actual output below its full-employment level. This type of unemployment occurs in response to changes in the business cycle, such as recession or economic downturns. It is often referred to as demand-deficient unemployment, as there is not enough demand for labor to employ all those who are seeking jobs. A decrease in demand for goods and services leads to a decrease in production, which in turn leads to job loss and cyclical unemployment. Therefore, option C is the correct answer.

Cyclical Unemployment Is Caused By