In an economic expansion, people used their charge cards to purchase many goods. Now the economy is in a recession and people must use much of their reduced incomes to pay back debts. If employees manufacturing the goods people used to buy are laid off, they will suffer from:

Question

Quizplus · Accepted Answer

Cyclical unemployment occurs during economic contractions, when businesses decrease production and lay off workers in response to a decrease in demand for their goods and services. In this case, the decrease in demand for goods due to people paying off debts is leading to layoffs, which is a form of cyclical unemployment.

In an Economic Expansion, People Used Their Charge Cards to Purchase