Definition: Cyclical unemployment is a type of unemployment which is related to the cyclical trends in the industry or the business cycle. If an economy is doing good, cyclical unemployment will be at its lowest, and will be the highest if the economy growth starts to falter.
Description: Cyclical unemployment relates to the business cycle in an industry. It is a direct result of fall in demand from consumers leading ot a slump in demand for labour.
If cyclical unemployment is rising, it also means that the economy is showing signs of slowdown which is not good. The lack of demand means that there is not enough consumption. The government would then need to address the issue by various fiscal and monetary policies to support economy.
Cyclical unemployment is one of the five unemployment types which are recognized by economists. Apart from cyclical unemployment, there are structural, and frictional types of unemployment.
Cyclical unemployment is directly related to the macro-economic situation in the economy. It would rise at a time of recession, while reduce when the economy starts recovering. The economic activity tends to move up and down and cannot be classified as linear.
When the economy slows down, it will reduce the overall demand, reduce consumption, and that would lead to production cuts in various industries. We have seen that the auto sector resorted to production cuts at a time when the demand for cars were slowing due to higher fuel prices and economic slowdown.
When the company is not getting enough demand, it curtails production and in the process it has to let go of lot of people which leads to cyclical unemployment. It could happen in any industry.
Description: Cyclical unemployment relates to the business cycle in an industry. It is a direct result of fall in demand from consumers leading ot a slump in demand for labour.
If cyclical unemployment is rising, it also means that the economy is showing signs of slowdown which is not good. The lack of demand means that there is not enough consumption. The government would then need to address the issue by various fiscal and monetary policies to support economy.
Cyclical unemployment is one of the five unemployment types which are recognized by economists. Apart from cyclical unemployment, there are structural, and frictional types of unemployment.
Cyclical unemployment is directly related to the macro-economic situation in the economy. It would rise at a time of recession, while reduce when the economy starts recovering. The economic activity tends to move up and down and cannot be classified as linear.
When the economy slows down, it will reduce the overall demand, reduce consumption, and that would lead to production cuts in various industries. We have seen that the auto sector resorted to production cuts at a time when the demand for cars were slowing due to higher fuel prices and economic slowdown.
When the company is not getting enough demand, it curtails production and in the process it has to let go of lot of people which leads to cyclical unemployment. It could happen in any industry.
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