Cyclical unemployment occurs when
A) individuals enter the labor market and make the rounds of potential employers.
B) individuals with skills no longer valued in the domestic labor market cannot find employment.
C) individuals give up the search for employment.
D) a downturn in economic activity decreases employment.

Question

Quizplus · Accepted Answer

Cyclical unemployment is the type of unemployment resulting from a downturn in economic activity. This type of unemployment is caused by a decrease in consumer demand for goods and services, leading firms to decrease production and lay off workers. Therefore, option D, a downturn in economic activity decreases employment, is the correct answer.

Cyclical Unemployment Occurs When