ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Cyclical unemployment is a type of unemployment where labor forces are reduced as a result of business cycles or fluctuations in the economy, such as recessions (periods of economic decline).

Detailed explanation-2: -An example of cyclical unemployment is when construction workers were laid off during the Great Recession following the financial crisis of 2008. With the housing market struggling, construction of new homes fell dramatically, leading to a rise in cyclical unemployment for construction workers.

Detailed explanation-3: -Economists describe cyclical unemployment as the result of businesses not having enough demand for labor to employ all those who are looking for work at that point within the business cycle. When demand for a product and service declines, there can be a corresponding reduction in supply production to compensate.

Detailed explanation-4: -Cyclical unemployment is the main cause of high unemployment rates. It’s caused by a downturn in the business cycle. It’s part of the natural rise and fall of economic growth that occurs over time. Cyclical unemployment is temporary and depends on the length of economic contractions caused by a recession.

Detailed explanation-5: -Cyclical Unemployment During an economic downturn, a shortfall of demand for goods and services results in a lack of jobs being available for those who want to work.