Final answer:
A decrease in recessionary GDP gap is most likely associated with a decrease in cyclical unemployment as it is directly related to the economic cycle and lowers when the economy improves and moves towards its potential GDP.
Step-by-step explanation:
Understanding Types of Unemployment
A decrease in a recessionary GDP gap will most likely be associated with a decrease in cyclical unemployment. Cyclical unemployment is directly related to the economic cycle and rises during recessions when GDP is below its potential level, leading to less incentive for employers to hire. When the GDP gap decreases, indicating that the economy is improving and moving towards its potential GDP, employers have more incentive to hire, reducing cyclical unemployment. Other types of unemployment, such as structural, frictional, and seasonal unemployment are less directly related to economic cycles and are not as impacted by changes in the GDP gap.
Types of Unemployment Explained with Examples
- Cyclical Unemployment: Landscapers laid off during a recession due to a drop in housing construction.
- Structural Unemployment: Coal miners laid off because of new environmental regulations.
- Frictional Unemployment: A financial analyst relocating and seeking similar work in a new state.
- Structural Unemployment: Printers laid off due to a technological shift towards digital advertising.
- Structural Unemployment: Factory workers laid off as manufacturing moves overseas.