Which type of unemployment spreads through the economy during a long downturn, reaching even skilled workers?
AFrictional unemployment
BSeasonal unemployment
CStructural unemployment
DCyclical unemployment
Answer & Solution
Correct answer: D. Cyclical unemployment
1. Cyclical unemployment occurs when a downturn in the business cycle reduces the demand for labor.
2. That fall in demand runs throughout the economy rather than in one industry.
3. In a long recession it becomes widespread, and even people with good job skills cannot find work.
4. Government can partly counteract it with programmes that boost the economy.
5. Frictional and seasonal unemployment are short-term and narrow, and structural unemployment is unrelated to the cycle.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 1 "Understanding Economic Systems and Business", section 1.4 Macroeconomics: The Big Picture_
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