Cyclical unemployment

Cyclical unemployment is a type of unemployment which is caused by trade or business cycles i.e it is directly related to the macroeconomic situation of the economy.

It would rise at the time of recession or slowdown and reduce while the economy is recovering or is in boom.

This is because a slowdown in the economy results in reduced consumption and demand leading to less production, which in turn results in production cuts and businesses lay off employees in such a situation.

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