AP MacroeconomicsUnemployment & Inflation
Cyclical Unemployment
Cyclical unemployment is unemployment that occurs due to a decline in economic activity during a recession.
Cyclical unemployment is directly related to the business cycle. During an economic downturn or recession, the demand for goods and services decreases, leading to layoffs and higher unemployment. When the economy recovers and enters an expansion phase, cyclical unemployment tends to decrease as businesses hire more workers to meet the increased demand.
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