Question

Which type of unemployment rises during economic downturns and falls when the economy improves?

a. Seasonal

b. Cyclical

c. Structural

d. Frictional


The Correct Answer is B...Cyclical, not Structural. Cyclical Unemployment Unemployment that rises during economic downturns and falls when the economy improves is called cyclical unemployment. During recessions, or downturns in the business cycle, the demand for goods and services drops. The resulting slowdown in production causes the demand for labor to drop as well, and companies begin to lay off employees.

Answer 1

I believe the answer is B. cyclical unemployment
Cyclival unemployment happens following the cycle of business Growth. When the businesses were in their peak, they will opened up a lot of job opportunities in the market which reduce the number of unemployment. As the businessses started to decline in production, they coould afford less employee and caused an increase in unemployment.