Multiple Choice
Which of the following is an example of frictional unemployment?
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11. Unemployment and Inflation
Types of Unemployment
Multiple Choice
In macroeconomics, cyclical unemployment refers to unemployment that is primarily caused by which factor?
A
Seasonal patterns in labor demand that create predictable job losses at certain times of the year
B
Workers temporarily between jobs because they are searching for better matches for their skills and preferences
C
A downturn in the business cycle that reduces aggregate demand and leads firms to lay off workers
D
A long-term mismatch between workers’ skills and the skills demanded by employers due to technological change or globalization
Verified step by step guidance1
Step 1: Understand the definition of cyclical unemployment. It is the type of unemployment that arises due to fluctuations in the overall economic activity, specifically related to the business cycle.
Step 2: Recognize that the business cycle consists of periods of expansion and contraction (recession). During a downturn or recession, aggregate demand decreases.
Step 3: Analyze how a decrease in aggregate demand affects firms. Lower demand for goods and services leads firms to reduce production and lay off workers, increasing unemployment.
Step 4: Differentiate cyclical unemployment from other types such as seasonal unemployment (caused by predictable seasonal changes), frictional unemployment (due to job searching), and structural unemployment (due to skill mismatches).
Step 5: Conclude that cyclical unemployment is primarily caused by a downturn in the business cycle that reduces aggregate demand, leading to layoffs.
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