The demand for automobiles rises when the economy experiences an expansion. If an automobile manufacturer hires additional workers during an expansion, this would be best described as an example of a reduction in
A) cyclical unemployment.
B) natural unemployment.
C) structural unemployment.
D) frictional unemployment.

Question

Quizplus · Accepted Answer

Cyclical unemployment occurs when there is a downturn in the economy and businesses start to lay off workers. Conversely, during an economic expansion, businesses will typically begin to hire more workers to meet increased demand for their goods and services. In this scenario, if an automobile manufacturer hires additional workers during an economic expansion, it would be an example of a reduction in cyclical unemployment.

The Demand for Automobiles Rises When the Economy Experiences an Expansion