A decrease in aggregate demand and the subsequent cutbacks in production lead to
A) frictional unemployment.
B) cyclical unemployment.
C) cost-push unemployment.
D) structural unemployment.
E) transitory unemployment.

Question

Quizplus · Accepted Answer

A decrease in aggregate demand and cutbacks in production leads to cyclical unemployment, which is unemployment that occurs as a result of fluctuations in the business cycle. This type of unemployment occurs when there is a lack of demand for goods and services, causing businesses to reduce production and lay off workers.

A Decrease in Aggregate Demand and the Subsequent Cutbacks in Production