ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -What is Cyclical Unemployment? 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: -Definition: Seasonal unemployment occurs when people are unemployed at particular times of the year when demand for labour is lower than usual. For example, in a Ski resort unemployment is likely to be higher in the summer when there is no snow.

Detailed explanation-4: -Cyclical Unemployment: actual rate of unemployment-natural rate of unemployment = u-u*. The cyclical rate of unemployment is the unemployment created by recessions and booms. During recessions, u-u* > 0; during booms, u-u* < 0.

Detailed explanation-5: -Cyclical unemployment happens as a result of the impact of economic recession or expansion. When consumer demand for goods and services drops, there’s a reduction in production, which often leads to layoffs and higher cyclical unemployment. Multiple types of unemployment often exist at the same time.