Final answer:
The coronavirus recession instigated shifts in both labor supply and aggregate demand, leading to increased unemployment. As labor supply and demand decreased due to lockdowns and reduced spending, cyclical unemployment rose with over 20 million people jobless at its peak. Federal measures provided some economic recovery, but unemployment was still elevated at the beginning of 2022.
Step-by-step explanation:
In response to the question about the impact of the coronavirus recession that started in March 2020 on the labor market, it's important to use the labor-supply/demand framework to analyze the changes. The pandemic caused both labor supply and aggregate demand shocks. Lockdowns led to people leaving the labor force and becoming unemployed either due to business closures or health and safety concerns. This reduction in the workforce and hesitant return of workers caused a leftward shift in the labor supply curve. Additionally, the hesitation or inability to spend on travel and other services, along with pessimistic business outlooks, led to reduced investment, shifting the aggregate demand curve leftward as well. Consequently, this caused an increase in cyclical unemployment, with over 20 million people unemployed at the height of the recession. An array of federal interventions aimed at bolstering aggregate demand and supporting businesses and workers helped the economy to recover somewhat over the latter part of 2020, although unemployment remained high at the start of 2022.