What is the meaning of Cyclical Unemployment?

Cyclical unemployment refers to that part of overall unemployment which is caused by the cyclical trends of the business cycle. It is thus an offshoot of the fall in demand recorded in the business cycle which leads to a fall in demand for labour. This also means that consumption has fallen. Latter triggers a fall in production and thereby layout of excess workers.  Likewise, when business cycles reach their peaks, the unemployment dives due to maximised economic output.

It is thus directly related to the macroeconomic status of the economy. Thus, cyclical unemployment goes up during a recession and comes down during times of boom. Apart from it, other kinds of unemployment include structural and frictional unemployment as well.


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